Is a Balance Transfer Worth It?
A balance transfer can be a powerful tool to escape debt, but it's important to understand the costs. Most cards charge a balance transfer fee, typically between 3% and 5% of the total amount transferred.
What to Watch Out For
- Intro Period Duration: Ensure you can pay off the balance before the 0% APR period ends.
- Transfer Fee: Calculate the fee to ensure the interest savings outweigh the initial cost.
- Post-Intro APR: Check what the rate will be after the promotion ends.
- Impact on Credit: Opening a new card may temporarily lower your score, but reducing debt will help it long-term.
Strategy for Success
To maximize your savings, divide the total balance (including the transfer fee) by the number of months in the intro period. Make this your target monthly payment to reach zero before interest kicks back in.