If you’re like most Americans, you probably get a balance transfer offer for your credit cards at least once or twice a week. You know, the old “0% for 6 Months on all Balance Transfers.” This may sound tempting if you’re touting around a card with a 24% interested rate. However, what they neglect to tell you is that you usually have to pay 3% or more of your total balance as a finance charge to do this. For example, if you have a $3,000 balance you want to roll over into a 0% card for so many months, you’re going to pay 3% of the $3,00o balance up front as a finance charge. This would amount to $90. Now, if you’re fairly certain you can pay the card off in the 6 months, you would be saving very little. These offers used to much more tempting when there was no finance charge associated with them!
Some people feel like they are good at business and finance matters and
decide to pursue a business degree online to educate themselves even more about the business of
finance and credit cards.
There are four things to consider when making this decision:
- Your current card’s interest rate
- The new card’s promotional balance transfer fee (it’s percentage rate plus any minimum and maximum dollar amount if applicable)
- Your new card’s promotional interest rate and length
- Your new card’s regular interest rate (after the promotion is over)
Then you have to decide whether you can or cannot pay off the balance in the promotional period! Remember, you may also have a small drop in your credit score after the company does a credit inquiry! Balance transfers are usually only a quick fix to a larger problem. You HAVE to learn how to live on a budget. This should ALWAYS come first, even before you look at your debt. The past is the past, but you have to learn to live on what you have right now. However, if you are savvy with your budget, and you can really send in additional money with your payments, and pay it off within the promotional period, then this might be the right choice for you! CLICK HERE for the Credit Card Pay Off Calculator!
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