Thoughts On Balance Transfer Credit Cards

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[nickbilotti]

Generally like their advice but totally off base here assuming your only goal is to pay down your debt and not use any additional credit. 0% for 21 months can be a lifesaver

[BG-qsii]

I helped a friend who had 11k in credit card debt get out of credit card debt by utilizing a zero fee balance transfer card. Main point is that he was really motivated to get out and it saves him thousands.

[stephenshelton]

Both can be true. Yes 5% of $10, 000 is $500, but 27% of $10, 000 is $2700. By not regrowing the debt by $2200 you would basically save close to $600 in interest the next year. Wht is Ramsey's advice always built on the premise that people are stupid and remain stupid even when they realize they must change?

[MrJonjoe]

I did this to pay off a large debt. The cards I used had zero fee and zero interest for a limited time. I had to transfer several times to pay it off in full. If you're disciplined and organised it works great. If you're not do something else.

[Tiggaknock]

But a generous amount of cards now days don't charge transfer fees. So does that mean they aren't bad? Because I'd rather transfer $10k from a 29% apr to a 3.9% any day even with a fee.

[authenticallyshawnte]

I love the Baby Steps but if you only have a $500 BT fee then thats less than paying the interest on a 28% card for 12-18 months. If you do this right it can help you. Personal finance is PERSONAL. Do what's best for you!

[jimmymcgill]

Yes, do it. Even with the fee, it might come to less.
These people say to cut what you can from your budget.
They're trying to cut interest from their budget. Now they don't like it.

[IXMBEANOS]

$500 one time fee instead of interest for the entire year is significantly cheaper

[Hot.sausee]

This is where Dave looses some cred in the personal finance game. If you are committed to paying off your cards and will cut it up after the balance transfer, that 3-5%, which can sometimes be 0%, is a lot cheaper than a year or 18 months with 29% APY on the cards… of course if your going to keep spending it’s stupid. But that $300 fee to transfer $10k, could easily save $3000 worth of interest over the year you are paying your debt down….

[callravik]

so keep paying 28% interest rate, looking at the mirror, and self deprecating. Yes. Makes sense.

[jorgealvarado]

Solution: Cancel the card once the transfer is complete.

[Chuck]

This is actually good advice. The part they left out was that once you do a balance transfer you now have a credit card that you can spend on again. And sense they haven’t solved the root problem they likely will and add even more debt to the mix.

[Lovemonniibee]

Really depends on the terms here + your current interest rate and the amount currently owed. I’m not a fan of balance transfers either, but sometimes in order to make progress you got to stop the bleeding.

If your 0%APR period is going to be 15-18 months and the balance transfer fee is going to be less than your month interest rates then absolutely do it.

And of course address your spending habits that got you to this situation in the first place too

[knurles]

real answer is to do the math that one time transfer % may make sense, but a 500$ payment to a smaller credit card could ve meaningful. all depends on terms and timelines. for many people yes it makes sense so long as that new card doesnt get to be spent on.

[jimmycrumpler]

It does if you can pay off the debt in that time, 5% beats the hell out of 22%

[RepoManInIndy]

So if you cut up your cards and you’re not using them, why not pay 0% interest on what you’ve already spent and just transfer it?

[KHPCLUB]

Their logic: You’re too much of a child to pay no more interest and consolidate your existing debt, so keep paying more interest but still cut your expenses down to eating air and sleeping outside on the sidewalk.

[johnhwang]

The key is when transferring to the 0% interest for 12 mths or whatever term not to use that card for new purchases. Any new purchase will accrue interest the first day it is charged. Payments goes to pay off the 0% first before the balance that accrues interest.

Also, the cards that were transferred from is to not use them until after 2 full billing cycles. Pay off the interest they add until it goes to zero balance.

[raytesiandouglas]

As someone with cc debt i appreciate the advice it made lol.

[Maverick_Maple_Syrup]

His advice is like a doctor saying “Oh you got hurt, shouldn’t have done that in the first place. I can’t help you now.