My initial response is an immediate and emphatic, “NO!” However, it may be worth it to transfer your credit card balance to a lower rate while you pay it off if you follow the necessary 3 Rules of Transferring.
The main reason I say no is because your credit card debt transfer can be used as a crutch and prolong your debt repayment. In the end, it will actually send your debt higher. It’s kind of like saying, “I will pay off this furniture within 90 days, so I might as well take advantage of the same as cash offer.”
Studies show that about 80% of people do not actually pay off their balance within the 90 days. The same applies for credit card debt transferring. Once the teaser rate of 3-6 months is gone, you are left with, likely, a larger interest rate than when you began. In addition to the larger interest rate, you may have to go back and pay the larger rate for the last 3-6 months. Just typing these rules makes me angry. I hate this game! Be careful, read the fine print, and get out of credit card debt as soon as possible so you don’t EVER have to deal with this situation again.
I need to take a breathing time out now. (Take ten deep breaths. I am picturing myself lying in the sun on a beach. I am weightless now.)
Ok, I think I’m ready to be nice again.
Another reason I say no to transferring your credit card balance is because you are on a mission to get rid of this credit card debt as soon as possible with your Red Level Intensity. If the debt will go away within the next 12 months, why waste your time and headache transferring the debt over and doing all of the required paperwork? Instead, just knock the debt out and be done with it.
If you are positive that you are in the 20% of people of who actually pay off the card in time, you may proceed with a credit card transfer pending you follow the 3 rules of transferring your money.
1. Make sure it’s worth your time. If you go through with the trouble of transferring your balance, please make sure that the money you save is worth the time and effort. In fact, you must run the numbers via the provided Excel Spreadsheet to find out exactly how much money in interest a transfer would save you. For instance, let’s say you have a $1000.00 credit card balance and are currently paying 10%. You get an offer for 3%. If you are paying $200.00 per month, you will learn by using the spreadsheet that you would only save a total of $18.20 for transferring your balance. I wouldn’t waste my time and effort.
If, however, you have a $5000.00 balance, you are paying 20%, and are paying $500.00 per month, and this same deal comes along, the numbers look different. Here you would same $445.26 in interest. This is almost a full month of savings. Be careful that the 3% runs for at least the duration of your payoff timetable. Otherwise, your new credit card company will start to pull the aforementioned dirty tricks and I will have to go back to my unhappy place.
1a. The money you save on the interest goes directly to paying off the credit card debt. If you are saving $500.00 in interest over 5 months, add the extra $100.00 to the payment.
2. Have a written plan to pay off your credit card debt. You should already have a monthly budget written out and have a plan set in place on how you are going to eliminate this debt.
3. Promise that this will be the only time you transfer your balance. You only get one time to do this. Do not make it your full time job transferring your credit card balance from one teaser rate to the next.
If you promise to follow the 3 Rules of Transferring money and it makes sense, you can transfer your money to the teaser rate.
In the end, regardless of which direction you take (transfer or no transfer,) the end goal is the same: Get out of debt as soon as possible and never go back!
Please keep sending your questions/concerns/suggestions/victories. We love hearing from you.
