When does it make sense to use balance transfer cards?
When does it make sense to use balance transfer cards?
Lets say, we have $10,000 in Debt and there is a significant interest rate on it.
On a $10,000 balance, roughly $175 of a $200 monthly payment would get vacuumed up by interest charges. That means only $25 of our $200 payment actually goes toward reducing your existing balance, the rest vanishing into the bank’s pockets. That’s just brutal.
If we transferred that balance onto a card that offers 15 months of 0% intro APR with no transfer fee, and maintained the same $200 monthly payment, we can see how much faster you’ll be reducing your balance in the chart below.
Without the 0% intro APR card, our $200 monthly payment barely makes any headway — it’s like swimming upstream. If we move our balance onto a credit card that offers zero-interest balance transfers, we will be able to start making real progress toward getting rid of the debt with high interest rate.
The Breakdown
- Press Pause on Interest Payments: Using the right balance transfer card, you can avoid paying interest for over a year or longer.
- Pay Down Debt Faster: With zero interest to pay, you can put more of your money every month to pay down your principal balance instead of potentially wasting hundreds on interest.