A balance transfer credit card can be your ticket to savings and out of credit card debt. But you need to use it responsibly. If you don’t, you could wind up making the situation worse.
With that in mind, here are a few balance transfer mistakes to avoid:
Assuming 0% balance transfer offers are always around: People often think they can just hop from one 0% balance transfer card to another until debt-free. But if the music stops and you’re stuck with a big balance and a high regular APR, this will prove to be a very costly mistake. And when the economy takes a turn for the worse, it’s very possible that no 0% transfer cards will be available, especially those with no transfer fee.
Overestimating your ability to pay: This will result in more of your debt being exposed to a card’s regular APR. Considering that the average 0% balance transfer credit card has a regular rate of 17.51%, you certainly don’t want that.
Forgetting that most regular APRs are variable: When interest rates are hovering near historical lows, there’s really only one way variable rates can go. And it’s not down.
Finally, failing to use a balance transfer credit card calculator is a big mistake. This type of free tool is the best way to plan your payments and estimate your savings. And it will help you pay off what you owe before expensive regular rates kick in.
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