With so many benefits of using a balance transfer credit card, it’s easy to assume that this is the best decision for you and your finances. While you may find this to be true, you never want to make a final decision until you look at both sides.
There are some select situations when a balance transfer doesn’t make sense:
- If you don’t have enough debt: It doesn’t typically make sense to combine two small balances to form one big one. For example, if you have a $500 balance on two separate cards, you’re better off eliminating one and then moving onto the other. You don’t need a balance transfer credit card to make progress.
- The balance transfer fee outweighs the savings: Remember, you’ll pay somewhere in the range of three percent of the amount of money you’re transferring. So, if you’re transferring $10,000, the balance transfer fee is $300. If you’re not able to save this much before paying off your balance, it doesn’t make sense to proceed.
- There’s a better option available to you: Maybe you have other types of debt, such as medical bills, that also require your immediate attention. Rather than use a balance transfer credit card, you may be better off with a personal loan. This allows you to put all your debt under the same roof.
If none of the above come into play, there’s a good chance that a balance transfer credit card is exactly what you’re looking for. Once you’re sure this is the answer, compare all available offers to ensure yourself of applying for the right card.
It’s your hope that a balance transfer credit card saves you money, all while helping you better organize your debt. With the right approach, that’s exactly what will happen.
Do you have any experience using a balance transfer credit card? Was this the right decision for you?