Adam McCann, Financial Writer
Yes, balance transfers are worth it because they are a very good way to refinance existing credit card debt. This can save you money by getting you a lower interest rate, preferably 0% for a certain number of months. A balance transfer is most likely to be worthwhile if you have good credit or better, you qualify for one of the best balance transfer credit cards, and you use the savings to get out of debt faster. Transferring a balance should not be an excuse to overspend.
If you’d like to estimate how much you could save with a balance transfer, you can use WalletHub’s free balance transfer calculator.
When Balance Transfers Are Worth It
When they save you moneyYou should always aim to transfer a balance to a credit card that has a significantly lower APR than your current credit card or loan. There are credit cards with 0% introductory APRs for a certain number of months, which are generally available to people with good or excellent credit. It’s also ideal to get a card with a low balance transfer fee, though an especially long 0% period can offset a higher fee.
When they won’t tempt you to spend moreIf the balance you’re transferring is from another credit account, the transfer frees up the credit line on that account, allowing you to spend more. If you’re not careful, you could end up increasing your debt to unmanageable levels.
When other debt payoff options aren’t betterThere are a number of other ways to pay off debt, like taking out a personal debt consolidation loan or tapping into your home equity. You should explore multiple options and their costs before deciding on one.
When you have a solid payoff planBefore you make a balance transfer, you should have a plan for how much money you will put aside each month to pay it off. Ideally, you should pay off the full balance or as close to it as possible during the card’s introductory APR period, if it has one.
In many cases, a balance transfer will be worth it, but there are also some situations where it won’t be. You can learn more about the pros and cons of balance transfers on WalletHub.
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