You have seen the offers of having you transfer a balance for a promotional period of a low interest rate and typically a fee (but sometimes there are no fees). These offers are very tempting especially if you have a balance on a high interest card. Is it smart to make the move? We’ll discuss this and more in this episode.
What You’ll Learn In Today’s Episode:
- Who is a good candidate for using this type of offer
- What you need to consider before taking that balance transfer offer
- The exact steps you can take to be strategic to maximize your savings
- One important caution about these offers
Step 1: Preparation
Are you a good candidate?
If you have a high interest rate credit card, or debt, then a balance transfer could be a good option for you. If you are a balance transfer veteran, and you find yourself stuck in an endless loop, a balance transfer is not for you. By taking the offer you are keeping debt and not taking advantage of the balance transfers.
A balance transfer is a great way to reduce debt fast, but you need to consider your credit score. A good credit score is necessary to receive these offers. Balance transfers are only offered for a limited amount of time. If the balance is not paid off before the deadline, the bank makes more money off of you. If you are doing multiple transfers, you need to consider the fees for these transfers. Some offers come without transfer fees. You can check for transfer fees at bankrate.com. You must also be aware of scams. If $400-600 are asked up front to lower the interest rate, it is likely a scam.
Step 2: Create a Plan
Need to know what extras you have available to pay these balances? Don’t guess! Make sure to do your homework and create a budget. Take note of how long the promotional period is. Realistically, what can you pay towards the transfer offer during this time? You need to consider the old balance on the card you are transferring from; that needs to be paid off too.
Step 3: Set Up the Balance Transfer
You want to ensure the card being transferred is solely for the purpose of the balance transfer. If you also use the card for purchases, the interest rate will change for the purchases. Use the card only to pay off the balance. Automated payments are highly encouraged, to ensure payments are on time.
Resources From This Episode:
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Abrazos + Much Love,
P.S. THANK YOU for listening!
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The post, HMM 147: A Three Step Process in Using a Balance Transfer Offer To Maximize Your Savings appeared first on the Her Money Matters Podcast.