What’s the most important factor to consider when using 0% balance credit card transfers to pay off debt?
• Interest rates
• Type of debt
• Credit limit
• Duration of Promotion
Answer: Duration of Promotion
The most important factor to consider when using 0% balance credit card transfers to pay off debt is the duration of promotion. Here’s why…
Being stuck in credit card debt can feel like being trapped in an endless pit with with no way to climb out. One way to get out of credit card debt is to use a 0% balance transfer offer coupled with a long promotion period. The longer the promotion, the better the chance of paying off the total balance without getting into more debt.
A balance transfer credit card is designed to move balances from one credit card to another. These credit cards start off with a low introductory interest rate for a specified period of time, and that’s where most people get trapped. After the period ends, the rates go up, and could even exceed the rates you were paying on the original debt.
How to Use Duration of Promotion
Before consolidating at all, add up the balances on the cards in question. Start with the ones that have the highest interest rates first. Now, factor in any balance transfer fees, which are usually around 3%. If you can pay off the total balance by the end of the promotional period, consolidating your debt into a 0% credit card is a smart move.
Alternately, your balance may exceed what you can pay off during the promotional period. That doesn’t mean it’s a bad deal. Figure up the balance on the cards you want to transfer, including interest. Now, compare your existing payoff amount with the amount you would pay using a 0% interest credit card. Choose the one with the smallest balance payoff.
Balance transfer credit cards can help consolidate debt, but it’s important to know and understand how they work in order to get the best results. As always, pay extra when you can. Unlike some of your minimum payments, extra payments go directly toward the original loan, reducing your interest.
~To Your Survival!
Dave Ramsey on Using 0% Credit Card Balance Transfers