Are You Thinking of Transferring a Credit Card Balance? Hang On!


Transferring credit card debt isn't necessarily the best way to reduce financial stress. In the long run, it may cost you more money!

People who consider balance transfer cards are typically individuals struggling to pay off the principal of their credit card debt due to high monthly interest payments.

With balance transfer cards, you can make one, low-rate monthly credit card payment instead of several. That is the idea anyway.

However, let me caution you, if you're simply transferring balances from card to card, the new one won't eliminate your debt woes. In fact, you could wind up making them worse because balance transfers often involve fees and could carry high go-to interest rates once the introductory period is over.

John Ulzheimer, a nationally recognized credit expert says "You have to do a balance transfer for the right reasons, to do it to tread water for another 12 months before sinking is not worth it. To tread water while aggressively paying down your debt in 12 months -- that's the right strategy." I agree!

Here are helpful tips on balance transfer cards:

Before jumping at an offer, read the fine print and calculate the costs. The key figures to know and understand are the:

  • Introductory interest rate. How long do you get the low rate and is it better than what I am currently paying?
  • Annual percentage rate (APR) after the intro rate. This is the “go-to” rate and can often be higher than your current credit card interest rate. Be sure to know what this rate is.
  • Balance transfer fee. How much are you charged to transfer to the new card?
  • Minimum monthly payment. What will the impact be on your overall budget? Will you be able to pay off the balance under the new payment schedule? If not, don’t do it.

My advice: Don’t make the transfer if you are not able to live on a budget and make progress paying off the debt during the introductory period.


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