Transferring your credit card balance can save a lot of money in the long run, but you have to consider a few factors before pushing that button.
1) Balance Transfer Fees: Most institutions charge a fee for this service, which cuts into any potential savings. Read the fine print and see what this will cost you.
Shameless plug: SPFCU doesn't charge balance transfer fees
2) Promo Period: Those low or 0% interest rates don't last forever. If you won't be able to pay your balance off before the period ends, you're stuck with the card's higher rate going forward. Make sure that the actual rate is something you can live with if you won't be able to pay it all off in the promo period. It's a good idea to search for a low-rate card with a balance transfer offer if your balance is on the daunting side.
3) Credit Score Hit: Applying for new credit dings your credit score, opening new cards or closing old ones could hurt your length of credit history, and if the new card has a lower limit, it might impact your credit utilization. All of these could lower your credit score for a time.
If you pull the balance transfer trick too often or apply for several cards at once it could negatively impact your future loan applications and the rates you can access. If you have other big loan applications coming up (mortgage, auto, etc.), it might be better to hold off on the balance transfer until that loan goes through. You should do your research and talk to an advisor if you're in this situation.
4) Your Situation: Are you going to pay down your balance during the promotional period? For some people, getting another credit card leads to spending more money, instead of paying down balances. If you can't, or won't, pay off a chunk of that debt while you're getting lower interest charged, you won't see much benefit. This is a good time to throw together a budget and debt repayment plan, and plan to put a little extra toward your monthly payments if possible.
Depends on the fee that is charged and how long the 0% is good for. If you can get it paid off in the time frame offered, it is very much worth it. Calculate the savings based on the rate you are currently paying and then rate going to 0.
Not all balance transfers are the same. With most there is fee involved with the transfer and the rate for which the transferred amount is charged can vary greatly. What you need to look at is with the fee (usually a percentage of the amount transferred) and the rate for the transfered amount, how much total interest will you pay when you have finally paid the whole debt off. 0% transfers are most typically limited in time for that rate, yo need to be honest with yourself as to the complete payoff of that debt since any remaining after the promotional period will be charged interest. I have heard friends say "it 0%" but know full well they won't be able to pay the debt off during that period. The rate the will be charged added to the fee for the transfer ended up costing more than if they just kept it on their original card. The key is to do the math and be honest with yourself. Often the transfer promotion is a good deal, but as I said you have to be honest.
A balance transfer may be worthwhile. An analysis must be done based on the total dollars outstanding. There typically is a 4% "transfer fee" assessed in order to accomplish. This sum should be compared to the interest cost being charged. Also needing consideration is how fast could you pay off the balance? When you figure out the interest costs vs fees, that will give you the answer.
Transferring credit card debt to a no interest credit card usually comes without a fee and sounds like it would be a great idea. I agree with the other posts saying that setting up a monthly payment to pay off the credit card makes perfect sense. You would be debt free when the promotion ends.
You have to be realistic and do some soul searching. Why are you carrying credit card debt in the first place? There may be uncontrollable circumstances so it is not for me to judge or lecture but the only reason to carry high interest credit card debt is because you are spending more than you are able to repay on a monthly basis. The only way to solve that problem is to control the amounts being spent with your credit cards. If the balances are the result of a totally unforeseen circumstance such as a medical bill that needed to be paid it would probably not be a spending problem so this paragraph and the one that follows would not even apply.
I have found that more often than not, when credit card balances are zeroed out through transfers of balances, those credit cards again become available for spending and often become the cards of choice for future purchases. Instead of paying off the zero interest credit cards, minimum monthly payments are made on all of the cards and the creditor ends up with maximum balances on all of the cards including the promotional card which most often has (after the promotion) a higher rate of interest than the original cards had before the balance transfers.
I'm not saying that it is easy to do but my advice is that whatever you decide to do make a firm commitment to repaying all credit card debt. Set up a realistic spreadsheet of monthly expenses including your credit card repayment and be committed to living with spending limitations. Be sure to allocate an amount each month to be used for the totally unexpected expense. If the unexpected expense never comes you will have started a nice savings account.
A balance transfer is worth it if you are disciplined enough to follow through with paying the balance within the slated time frame. For example, you have a cc with a high interest rate, you get an offer for 0% interest for 9 months. Two things to look at: 1) is there a "transfer" fee. Is that fee more or less than what you would be saving in interest? 2) are you able to pay the amount off completely before the expiration date? That is where the discipline comes in. It does not make any sense to just keep moving the same debt around and never paying it off. Some transfer fees can be 5% of your balance, you may not pay interest for 9 months but the balance transfer fees can also rack up if you are just moving money around. And you are never paying off the original debt. So it really depends on your circumstances and if you are able to make the payments within the time frame of 0% interest.
Answers (1-10)
Transferring your credit card balance can save a lot of money in the long run, but you have to consider a few factors before pushing that button.
1) Balance Transfer Fees: Most institutions charge a fee for this service, which cuts into any potential savings. Read the fine print and see what this will cost you.
Shameless plug: SPFCU doesn't charge balance transfer fees
2) Promo Period: Those low or 0% interest rates don't last forever. If you won't be able to pay your balance off before the period ends, you're stuck with the card's higher rate going forward. Make sure that the actual rate is something you can live with if you won't be able to pay it all off in the promo period. It's a good idea to search for a low-rate card with a balance transfer offer if your balance is on the daunting side.
3) Credit Score Hit: Applying for new credit dings your credit score, opening new cards or closing old ones could hurt your length of credit history, and if the new card has a lower limit, it might impact your credit utilization. All of these could lower your credit score for a time.
If you pull the balance transfer trick too often or apply for several cards at once it could negatively impact your future loan applications and the rates you can access. If you have other big loan applications coming up (mortgage, auto, etc.), it might be better to hold off on the balance transfer until that loan goes through. You should do your research and talk to an advisor if you're in this situation.
4) Your Situation: Are you going to pay down your balance during the promotional period? For some people, getting another credit card leads to spending more money, instead of paying down balances. If you can't, or won't, pay off a chunk of that debt while you're getting lower interest charged, you won't see much benefit. This is a good time to throw together a budget and debt repayment plan, and plan to put a little extra toward your monthly payments if possible.
Depends on the fee that is charged and how long the 0% is good for. If you can get it paid off in the time frame offered, it is very much worth it. Calculate the savings based on the rate you are currently paying and then rate going to 0.
Payoff your credit cards, avoid debt, live debt-free! It can be done and you’ll love it! Contact me for details.
Not all balance transfers are the same. With most there is fee involved with the transfer and the rate for which the transferred amount is charged can vary greatly. What you need to look at is with the fee (usually a percentage of the amount transferred) and the rate for the transfered amount, how much total interest will you pay when you have finally paid the whole debt off. 0% transfers are most typically limited in time for that rate, yo need to be honest with yourself as to the complete payoff of that debt since any remaining after the promotional period will be charged interest. I have heard friends say "it 0%" but know full well they won't be able to pay the debt off during that period. The rate the will be charged added to the fee for the transfer ended up costing more than if they just kept it on their original card. The key is to do the math and be honest with yourself. Often the transfer promotion is a good deal, but as I said you have to be honest.
Read/listen to Dave Ramsey. He’s got great advice about finances.
A balance transfer may be worthwhile. An analysis must be done based on the total dollars outstanding. There typically is a 4% "transfer fee" assessed in order to accomplish. This sum should be compared to the interest cost being charged. Also needing consideration is how fast could you pay off the balance? When you figure out the interest costs vs fees, that will give you the answer.
Thank you
For a credit card, yes. As long as you get 0% and pay it off during the time the 0% is offered. Don't carry a balance.
Transferring credit card debt to a no interest credit card usually comes without a fee and sounds like it would be a great idea. I agree with the other posts saying that setting up a monthly payment to pay off the credit card makes perfect sense. You would be debt free when the promotion ends.
You have to be realistic and do some soul searching. Why are you carrying credit card debt in the first place? There may be uncontrollable circumstances so it is not for me to judge or lecture but the only reason to carry high interest credit card debt is because you are spending more than you are able to repay on a monthly basis. The only way to solve that problem is to control the amounts being spent with your credit cards. If the balances are the result of a totally unforeseen circumstance such as a medical bill that needed to be paid it would probably not be a spending problem so this paragraph and the one that follows would not even apply.
I have found that more often than not, when credit card balances are zeroed out through transfers of balances, those credit cards again become available for spending and often become the cards of choice for future purchases. Instead of paying off the zero interest credit cards, minimum monthly payments are made on all of the cards and the creditor ends up with maximum balances on all of the cards including the promotional card which most often has (after the promotion) a higher rate of interest than the original cards had before the balance transfers.
I'm not saying that it is easy to do but my advice is that whatever you decide to do make a firm commitment to repaying all credit card debt. Set up a realistic spreadsheet of monthly expenses including your credit card repayment and be committed to living with spending limitations. Be sure to allocate an amount each month to be used for the totally unexpected expense. If the unexpected expense never comes you will have started a nice savings account.
A balance transfer is worth it if you are disciplined enough to follow through with paying the balance within the slated time frame. For example, you have a cc with a high interest rate, you get an offer for 0% interest for 9 months. Two things to look at: 1) is there a "transfer" fee. Is that fee more or less than what you would be saving in interest? 2) are you able to pay the amount off completely before the expiration date? That is where the discipline comes in. It does not make any sense to just keep moving the same debt around and never paying it off. Some transfer fees can be 5% of your balance, you may not pay interest for 9 months but the balance transfer fees can also rack up if you are just moving money around. And you are never paying off the original debt. So it really depends on your circumstances and if you are able to make the payments within the time frame of 0% interest.
If the interest is lower then you are currently paying and there are no hidden fees then it would be worth transferring the balance .