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Should I Use a Credit Card Balance Transfer to Consolidate Debt

I have some credit cards with a substantial amount of debt. I make all of my payments on time. Some of the cards are maxed out, and I make minimum monthly payments. On other cards, I use about 30-50% of the available line of credit. Should I transfer the debt to a new card?

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Bill's Answer
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Checking a Balance transfer offer to consolidate credit card debt

  • Balance Transfer comes with low teaser rates and high fees.
  • Read the fine print before doing a balance transfer.
  • If you don't have excellent credit, or need low long-term payments, then check other credit card consolidation offers.

Thanks for your question about consolidating credit card debt, and more specifically about a credit card balance transfer. You asked a tough question that involves looking at your overall financial picture and comparing your debt consolidation alternatives.

If you are carrying credit card debt, then you are not alone. According to the New York Federal Reserve, total household credit card debt at the end of June 2018 was about $830 billion. They estimate that 55-60% of consumers carry credit card debt. Interest rates vary greatly. According to the Federal Reserve G19 November report, the average interest rate for accounts assessed interest was 16.46%.

If you have some cards, then you might have a wide variety of interest rates. Some cards might even low introductory rates, and some or all may have annual fees. To determine if a credit card balance transfer is a good way to consolidate your credit card debt, take time to learn about dealing with debt.

What is Your Credit Card Balance?

Do you pay off your credit card bills each month? Do you only make minimum monthly payments? How much of your credit balance do you utilize? It is most likely that you use your cards for different purposes and the total amount you owe and pay varies each month.

The first thing that you need to do is determine the amount of money you owe. According to the credit card company, Discover, “Your credit card balance is calculated using your recent purchases, unpaid balances, interest charges and any fees incurred during the billing cycle. You can find out your most current balance by logging into your credit issuer’s portal or calling customer service — and some offer mobile apps where you can check and pay off your balance.”

Start by creating a list of your credit cards with the following information: Card name, the line of credit dollar amount, interest rate, current balance, minimum monthly payment, and the amount you plan to make each month.

Credit Card Balance Transfer - Read the Fine Print

A balance transfer offer often looks very attractive. There are two things to consider:

  1. Interest rates: Are there any teaser rates. The balance transfer offer It may come with a 0% introductory offer. Once that teaser period is over, you will face a higher interest rate and higher monthly payments.
  2. Fees: Balance transfer offers often have high fees and can be as high as 3%.
  3. Late Payments: If you make a late payment, then you might lose your introductory offer rates. 
  4. New Purchases:  Most often they aren't included, but check to see if new purchases are included in the offer.

Make sure you read all the fine print and understand the terms of the balance transfer offer.  

Should You Do a Balance Transfer to Consolidate Debt

In general, a balance transfer is an excellent option for someone with a high credit score and the ability to make substantial monthly payments on time, each month. If that is your situation, then you can consolidate your high interest credit card debt into a new card and start paying it off at a low or even zero percent rate. 

The balance transfer will free up your credit card debt on existing cards and improve your overall credit utilization, as long as you don't rack up new debt on those cards. It is a good idea to keep those cards but monitor your spending.

However, if your credit is less than excellent, you want to lower your overall credit card utilization, or you are looking for low affordable monthly payments for more than the introductory offer, then start looking for other credit card consolidation programs.


Compare your offers by using Debt Navigator.  

 The Debt Navigator is a free tool that recommends a debt solution based on priorities and goals you provide. There is no effect on your credit from using the Debt Navigator tool, which you can find below.

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