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You’re drowning in credit card interest fees.
You want to transfer your credit card balance to a new card that will give you a lower interest rate, preferably an introductory zero percent rate.
Should you? And if so, what qualities or features should you look for in a balance transfer credit card?
Before you begin, answer this one simple question:
Are you digging the hole deeper?
Are you making new purchases with a credit card today? Are you adding to your balance?
Or are you crushing your balance, watching your outstanding balance shrink every month, and looking for a little extra relief in the form of a lower interest rate so that you can be debt-free ASAP?
Is your credit card debt the result of life’s emergencies or misfortunes? Did it accumulate while you were unemployed due to an injury or illness? Did you rack up this debt before you started learning about financial independence, but you’re a different person with better habits today?
If you’re in hardcore debt-crushing mode, then transferring your balance to a new card with a lower interest rate might help you fast-track your debt payoff.
BUT if you’re digging the hole deeper, continuing to swipe plastic to pay for happy hour specials and restaurant meals despite your suffocating debt, then opening a new card is a terrible idea. It’ll only prolong the pain.
So the first question to ask yourself is: “Can I handle a new credit card responsibly? Or is there a risk that I might be tempted to spend more?”
Only you know the answer. Be honest with yourself. This is the filtering criteria for whether or not opening a balance transfer card is the right move for you.
If you decide you’d like to open a balance transfer card, here are three things you should look for:
#1: No (or Low) Balance Transfer Fees – This is a fee that you pay when you move a balance from one card to another. These fees are often in the 3 percent to 5 percent range, but you may find a special promotional offer from a card that waives balance transfer fees, at least for a period.
#2: A Long Timeframe for the 0 Percent APR — Your goal is to repay your credit card balance while you’re still within the introductory zero-percent APR period. Look for a card that gives you a zero-percent APR timeframe that’s long enough that you could pay off your balance during this time.
#3: No (or Low) Annual Fee — If you’re going to pay an annual fee for a card, make sure that the other two factors listed above (balance transfer fees and length of the introductory APR) are attractive enough to justify the annual fee. Remember that many cards also waive the annual fee for the first year, or offer rewards that justify the fee.
We’ve partnered with CardRatings to provide a frequently-updated list of excellent balance transfer cards. This is a carefully-managed list that’s updated regularly based on new offers, signup bonuses, rewards, fee structure changes, and other relevant information that’ll help you find the card that’s right for you.
Check it out, and best of luck crushing your debt.
Remember — use credit cards responsibly! Don’t dig the hole deeper! Use this ONLY if it’ll provide relief from the high interest rates that are weighing you down. Use it ONLY if it’ll help you speed up your path to living debt-free for life. Enjoy!
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Afford Anything has partnered with CardRatings for our coverage of credit card products. Afford Anything and CardRatings may receive a commission from card issuers.