Using Balance Transfers For Credit Card Debt

I got an email from a reader over the weekend, asking if I knew of any credit cards offering balance transfers without a fee, and zero percent interest on the transfered amount. I did some searching this morning, and every offer I saw for zero percent interest on balance transfers includes a balance transfer fee, although there are still some really good balance transfer offers out there. I suppose it doesn’t hurt to see if you can get them to waive the fee for you – the worst that will happen is that they’ll say no. I’ve seen some cards that have a max of $75 for balance transfers, and others with a max of $90. If anybody knows of one with no fee for balance transfers, please leave a comment!

If you’re considering balance transfers, there are lots of issues to take into account. How much debt to do you want to transfer? If you only have $500 in credit card debt, it’s probably not worth the hassle and transfer fees (likely $15, as most cards seem to charge 3%). But the more debt you have, and the longer the zero percent interest period lasts, the more likely it is to be a good deal.  There are lots of websites that show comparisons of several credit card balance transfer offers, with the interest rates and balance transfer fees for each one.  One of the balance transfers we did several years ago was to a Discover card, and it worked very well for us. We got the zero percent rate for as long as we liked, provided we made one purchase each month on the card. So every month we’d buy something for a dollar, and keep extending our balance transfer offer. We did have to pay interest on the stuff we bought, but even after a couple years, it was only adding up to about a dollar a month. That balance transfer saved us hundreds of dollars in interest, but it did require diligence on our part to make sure that we kept the deal going. Obviously the savings depend on how high your interest rate currently is, how long the introductory balance transfer offer will last (try to get at least 12 months), and how high the interest rate will be once the real rate kicks in. Finally, I would say that once you’ve done the balance transfer, do everything you can to pay off the balance by the time the introductory rate expires. And whatever you do, don’t be late with a payment – all bets are off if you don’t live up to the terms of the deal, and you could find that all of a sudden you’re paying double digit interest rates along with late fees. Of course this can happen with any credit card, but it’s especially painful if you go through all the effort of a balance transfer, get the zero percent interest rate, and then lose it because you miss a payment.