Q: My husband and I have a credit card balance of around $1,700 and it will probably take us several months to pay it off. The APR on the card is 12.99%. Is it worth transferring to a 0% credit card offer?
A: Because standard interest rates are so high nowadays, it usually (but not always) makes sense to transfer the credit card balance to a 0% promotional offer. Here are three things to consider…
1. Balance Transfer Fees
When deciding whether or not you should transfer a credit card balance, it’s important to remember that there is almost always a fee of 3% to 5% of the balance.
So when asking should I transfer my credit card balance, consider the length of time you plan on having the debt and the current interest rate you are paying.
If your current APR is in the double-digits and you plan on carrying your balance for 6+ months then it’s almost always cheaper to do a balance transfer. However, if you plan on paying off your balance in full within 3 months then it won’t make sense, unless maybe your current APR is in the 20’s.
2. Your Current Bank
There is not a single bank that I know of that allows you to transfer a credit card balance internally to take advantage of a promotional offer (i.e. from one Bank of America card to another Bank of America card is not possible).
For this reason, if you want to transfer a balance you’re going to need to use a 0% offer from a different issuer. When I say issuer, some people confuse that with Visa and MasterCard… that’s not what I’m talking about. Visa and MasterCard are only payment networks, they don’t actually issue cards. So it is okay to transfer your balance from a Bank of America Visa to a Citi Visa, for example.
3. The Card You Are Transferring To
Before the credit card reform went into effect, it was a bad idea to use 0% balance transfer credit cards for purchases, because your payments would be applied to the lower interest balance (the 0% balance) before it would be applied to your regular APR purchases.
Fortunately the credit card reform changed that and now it’s the opposite – your payments are applied to your HIGHER RATE balances first. So now it DOES make sense to use these cards for purchases, too.
Therefore when comparing 0% credit card offers, I highly recommend you choose a card you will actually want to keep… a card with rewards and benefits you like. Obviously you should also choose the best balance transfer offer too, but if there are different cards with similar 0% offers, go with the one that offers the best benefits.
Your Next Step
Should I transfer my credit card balance or not? Well, the above factors should definitely make your decision easier. If you are ready to transfer your balance, I highly recommend checking out Credit Card Forum’s sponsored offers: