Balance transfers only have pros in theory. When you transfer a balance, you’re ideally shifting high-interest debt to a credit card with a lower interest rate.
When it comes to potential cons, you generally need good credit or better to get a 0% balance transfer credit card. Most balance transfer cards have very high regular APRs, making it important to repay what you owe before the 0% period ends. In addition to that, many balance transfer credit cards will charge a balance transfer fee, usually 3% to 5% of the amount you transfer, so make sure you consider that added cost.
You can use this balance transfer calculator to compare the cost of repaying what you owe with your current card versus taking advantage of the best balance transfer offers.
While this mathematically may reduce the total interest cost, you should read the fine print prior to initiating a balance transfer. Many lenders or card issuers have different and higher interest rates for balance transfers than normal spending. If the rate on balance transfers is considerably lower, it may make sense to move forward with this transaction. Keep in mind that each time you request a credit card, it will negatively impact your credit score. I would not recommend taking advantage of teaser rates and moving from card to card; make it a goal to not carry a balance at all as soon as possible.
Hi! I'm with Eric on this one! Unless you are a person who keeps meticulous records, never ever misses a payment, and reads all the fine print, you stand the chance of making a mistake or missing a fee/charge that could make this plan more costly than if you just plugged way at paying off that higher interest debt as fast as you can. I do financial stuff for a living; I pay my credit card bills in full each month; I balance my checkbook; I write and stick to a budget; I pay all things on time; I read the fine print... and I have STILL made mistakes that have cost me fees over my 54 years! So it just makes me nervous when someone enters into a plan like the one you are describing. It's one of those things that is good in theory but often hard to put into practice. Best wishes and thanks for writing!
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