Balance transfer cards - worth it or just kicking the can down the road?

Personal Finance

I have about ,500 on a card at 24.99% APR. I keep getting offers for 0% balance transfer cards for 18-21 months. The transfer fee is usually 3-5%. Is this actually a good strategy or am I just moving debt around? Has anyone successfully used these to get out of debt? Im worried Ill just end up with more cards and more temptation to spend.

Stephanie White

3 Answers

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Balance transfers saved me thousands, but you need discipline.

Math on your situation:

,500 at 24.99% = roughly ,100 in interest per year if you only pay minimums

Balance transfer fee (4%) = one time

18 months at 0% = /bin/zsh interest

So you save about ,800 in interest over 18 months minus the fee = ,460 saved.

The key: divide your balance by the promo months. ,500 / 18 = /month. Pay that amount every month and youre debt free when the promo ends.

Rules to not screw it up:

Cut up or freeze the old card - dont add more debt

Dont use the new card for purchases (often those accrue interest immediately)

Set calendar reminders before the promo ends

Have a plan if you cant pay it all off

Its not kicking the can if you actually have a payoff plan.

Michael Williams

Balance transfers saved me thousands. Just make sure you have a plan to pay it off before the 0% ends. Set a monthly payment amount = balance / promo months and stick to it.

Stephanie White

Did 3 balance transfers over 4 years to get out of debt. The key is cutting up the old card so you dont recharge it. Transfer is only helpful if you stop the bleeding.