Some things to think about before doing a balance transfer

We just had this exact discussion in Financial Peace Univ last night (the Dave Ramsey class). Check out his books, they are GREAT!!

Here are some things to think about before doing a balance transfer:

  1. If you already have a balance on the card you are transferring to, every payment you make will go to the lower interest rate part first and the higher interest rate principal will not go down and will continue to accrue interest quickly!
  2. How long is the lower interest offer? Can you pay off the entire balance by then? If not, check what the rate will go up to. It could be even higher than what you have now.
  3. Make sure you do NOT miss a payment or are late. If you are, then the rate will go up immediately and other credit card rates may go up too. There is a new law that states other cards can raise their rates if you are late on another card.
  4. Remember if the interest rate is lower, then the minimum payment will be lower and it will take you longer to pay if off, so eventually you will pay about the same amount of interest. I would only do a balance transfer if you intend to continue slamming as much money as you can find onto that card to get it paid off quick! Don’t get complacent and pay only the minimum, this will take you 20 years to pay off.
  5. The ultimate goal is to pay it off and not charge anymore. If you balance transfer, then make a commitment to cut up and close the card that you transferred it off of.

The biggest thing to becoming financially independent is to live within your means and save. You would be surprised at how quickly you can accumulate wealth in a good money market or mutual fund. If you google “compound interest” you will find many amazing stories about how money grows without having to do anything. If you charge things on a credit card, you are essentially paying the bank instead of the bank paying you. Wouldn’t you rather have the money??

As long as you keep your balance(s) in check.

Transferring balances to lower-rate cards (assuming the fees are reasonable) will result in lower monthly payments, and paying with one of those checks instead of a personal check would mean a very-short-term relief on your wallet.

But, if the balances go up on several cards, the offers are bound to stop coming in (not to mention that your available credit on those cards with the “low rate balance transfer” offers would be getting lower and lower in such a situation).

Other than that, all the credit card banks care about is that they get something that represents a timely payment–they don’t care if it’s a balance transfer check from another bank’s card, an electronic balance transfer, or a check from your own checking account.

What we need is a low interest for about 1 yr and we will have it set up with our bank to have auto pay directly to them. Want to clean up the debt and do it ASAP. Tired of all the credit cards and the companies tricks. Know of any good cards that we can apply for or anyother way to cklean up our credit let me know. Afraid if we do the debt consolidation thing that it would end up hurting us more. Any opinions appreciated.

Question about transferring a balance

Many times I will receive an application about 0% interest for six-twelve months on a transferred balance. If I have, let’s say $3000.00 of debt on a loan at 10% interest, would it be worth my while to see about getting it transferred to the 0% interest offer? Has anyone ever done this? What would be the benefits to me?

I transfer balances so that I pay less interest while I pay it off. The key is to not run the original card back up otherwise you’re worse off than you started.

What helps to determine if I transfer is what is the interest rate after the intro period is up. What is the transfer fee ( I would never pay more than $75.00)? If the interest rate after the intro period is higher than my original interest rate (before I transferred), can I pay it off before the intro rate expires?

I usually don’t transfer unless the term is 12 months or longer and I know I can pay it off within that year. Currently, all my accounts have been transferred. I have 2 at 0% until April (both will be paid off by then), one is at 0% until November, when it will also be paid off. The others are at 3.9% or 4.9% for the life of the balance. Oh, but one is at 9.9% (came from a 17% card) and I am determined to have that paid off by the end of the year.

A lot of people don’t think it’s a good idea to transfer balances, but if I can pay it off at 3.9% instead of 17%, why not?

I believe there are balance transfer calculators on line somewhere that can help you and show how much interest you would be saving.

So, definitely worth transferring the balance! You will save yourself some $$$. You just have to make sure you do pay the $3000 during this offer of 0%. Most of those offers jack up the rate to 15%+ once the period is over.

Is there anything wrong with constantly transferring a balance to a lower rate until it is paid off?

Before making the transfer, get your paper,pencil and a calculator.

  1. Check to see if there are any transfer fees. If no, go for it.
  2. If there are fees, is it MORE than what you would pay in interest on the original card?

It wouldn’t make sense to pay for a transfer fee if the original interest would total out to be less than the fee. I’ve seen people get caught up in this. The ad spinmasters do a good job of smoke and mirrors.

IF you end up paying more in fees, than yes it’s “wrong”…. suppose there are no fees and the interest rate is lower, it’s usually an into.rate which will end. The card companies are counting on you to forget that end date and happily charge along.Vicious cycle.

I am aksing if it is wise to transfer 2 high balance credit card balances to 2 other cards that offer a 0% or just a lower interest than the original cards. Sorry abiout the confusion

No, as long as you keep receiving those great offers. The only catch I could find when I was doing that was the timing. Sometimes, it took a lot longer to make the transfers than I thought. And some companies count that as a payment, some donĀ¹t. So you might find that you have a month where you have to pay the card with the high balance and the card with the transfer. Does that make sense?