For people who are struggling to pay their credit card bills, transferring your many balances to a single 0% interest card might seem like a good idea. Shifting your open accounts to a new no-interest or low-interest card might be one way to save some money, however that outcome is not guaranteed by any means and your credit card balance transfers could end up costing more money than you had planned.
Sometimes those balance transfers can even be a step in the wrong direction, especially for people who have transferred their balances before. If you decide to apply for a loan it is not going to look so great to your potential lender when they see a history of balance transfers on your record that suggest you are unable to keep up with your credit card payments. A lot of balance transfers can be a real red flag for anyone who might be considering making you a loan.
Anyone who is already using credit cards with an APR of 10% or less may also want to reconsider transferring their balances due to the fact that most credit card providers charge a 2% fee of the total amount being transferred. If you’re not careful, you could end up paying more in fees to transfer your balances than the amount of interest you would already be paying on your current accounts. Add to that the fact that most 0% interest rate cards will revert back into double-digit interest rates after just a few months, the resulting numbers make staying with your current credit card provider look a lot better.
Those who can only make the minimum payments on their current credit card balances may also want to think twice about transferring their balances to a 0% card. If you examine the math on most credit cards, the minimum baseline payments are calculated in a way that makes it nearly impossible for anyone to pay them off completely when they are only making the minimum payments. If you transfer your balances to single card whose rate will double or triple in just a few months. it will only exacerbate the problem as the minimum payments are then more likely to be about double what you might be paying now.
Transferring your credit card balances to a 0% interest card temporarily is not always a bad idea, but you must be certain that you can pay off the balance before your new card’s no-interest rate period expires. If you already have good credit and simply want to take advantage of a low rate offer, a balance transfer might work for you. However, in the absence of good credit, it will almost always be a much better idea to get some credit counseling and try to clean up your debts instead.
