Balance Transfers – Three Things To Keep In Mind

Although we would all love to be debt free…sometimes it doesn’t go that way. Whatever got you in, it’s most important that you get out! Today we will go over three things I advise you to consider when looking over those tempting balance transfers.

Fees Vs. Interest – Balance Transfers

The first thing to consider is “will the savings from your current interest rate far outweigh the transfer fee.” Almost every credit card offer (even the “good” ones) will charge you between 3-7% to transfer a balance. A 0% interest balance transfer may seem like a no-brainer, but it depends. If you only owe $1000 on a credit card that charges 10% interest and you can pay it off in less than 6 months it may not be worth it. For larger balance, higher interest, or if you are looking at a long term on your debt it may be a great idea for you.

Spending Change – Balance Transfers

Are you going to change your spending? Or if it was an emergency that put you in debt, do you see it as an ongoing financial problem? I am not trying to be harsh, but I bring this up because it is important that the debt remains a priority even once it is transferred. Sometimes people have a tendency to transfer it and then stop worrying about it. That type of mindset can keep you in debt for a long time. I always recommending checking your habits, behaviors and values when shuffling around debt of any kind.

Action Plan – Balance Transfers

Transferring a balance should be a signal to you to check your finances. Always know the amount of debt that you have and consider steps to eliminate it (even once it’s transferred). Always follow up a transfer with a good solid plan on how to pay it off and when you will have it paid off.

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