0 Balance Transfer Credit Cards – Pros and Cons

About 0 Balance Transfer Credit Cards

If you need a break from paying your credit card bills, 0 balance transfer credit cards offers could be for you. The gist of a 0 balance transfer credit card offer, also known as a transfer interest-free credit card is you pay 0 percent interest on the credit card balance you transfer for a stipulated duration, usually anywhere from 3 to 15 months.

Just like any money management technique or investment, a 0 balance transfer credit card offer has both advantages and disadvantages.

Click Here to Apply to Numerous 0 Balance Transfer Credit Card Offers

Advantages of getting a 0 balance transfer credit card:

  • Save money in the long run. The 0 balance transfer provides an excellent opportunity to cut interest costs on existing credit cards, especially if you’re able to pay balances off during the 0 percent transfer period.
  • Protect your credit record if you’re in a cash crunch and can’t make present credit card payments.
  • Convenience – consolidating all credit card bills into a single payment results in fewer deadlines to observe and less time spent paying bills.
  • Access to more cash – transfering your credit card balance frees up credit in the event you need funds – say for a business start up.
  • Make money using other people’s money. If you are willing to take the time, you can continually take advantage of 0 transfer credit card balance offers so that your interest rate remains at 0 on the long run. Effectively you are then borrowing free money. You can then invest that free money.
  • If you transfer your balance to a credit card with a dividends offer or air miles or some other reward system, you capitalize on those rewards. Check out the terms to see if and when the credit card rewards kick in.
  • Speed: you can be approved very quickly. It’s relatively little hassle for what could be numerous financial advantages.

Click Here to Apply to Numerous 0 Balance Transfer Credit Card Offers

Disadvantages of taking a transfer interest free credit card offer

  • Lose money – the interest rate at the end of the interest free credit card period may jump up and exceed your present interest rates (i.e. the rates before you transferred your credit card balance). What you hoped would save you money could, if not well-managed, cost you more in the long run.
  • You may spend more than you planned. Transferring your balance will gain you available credit on your present cards which you may use up resulting in more debt than you intended.

Pitfalls to watch out for with 0 percent balance transfers

  • Transfer fees: you may get dinged with flat rate fees and/or a fee amounting to a percentage of your credit card transfer balance.
  • The end of your interest free credit card period. This is a biggie because your interest rate will undoubtedly jump significantly on the balance remaining.
  • With most 0 transfer credit card offers, the zero interest applies only to the balance you transferred; not to new purchases. Therefore, even if you buy something within the interest free period, the stipulated interest rate will apply to that purchase.
  • Again, with most interest free credit card offers, any cash advances after the balance transfer will incur interest charges. In other words, the 0 percent interest applies only to the balance transfer; not future purchases and/or cash advances.
  • When the interest free credit card period ends, and if you have a balance remaining, most cards will apply all payments to the lowest rate balances first.

Click Here to Apply to Numerous 0 Balance Transfer Credit Card Offers

At the end of the day, if you’re able to pay off most or all of a 0 balance transfer credit card balance offer, you can save a significant amount of money over 3 to 15 months, depending on the duration of the 0 percent interest period. If you foresee your financial situation improving, but need an interest free credit card period to gain a financial foothold, then taking advantage of 0 balance transfer credit cards offers can be a good financial management move for you and your family.

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Best 0 Balance Transfer Credit Card For You: How to Choose

Deciding to apply and get a 0 balance transfer credit card should be a strategic personal finance decision.  The best 0 balance transfer credit card for you is one that meets your strategic personal finance goal the most.

Which 0 balance transfer credit card for you depends on your objective.  Once you know your objective, then you can choose and apply for the best card for you.

Considerations when looking for a 0 balance transfer credit card

1.  Interest free duration

Determine how long you’d like to have an interest free period.  The range among these types of credit cards varies widely, from 3 months to up to 15 months.  If you wish to delay interest accrual for as long as possible, then apply for then the best 0 balance transfer credit card for you is one that delays interest accrual on transferred balances for 15 months.

2.  Transfer fees

The downside to these types of credit cards is that you pay an up front transfer fee, often 3% on the balance you transfer.  This amount can add up.  For example, if you transfer $5,000, your transfer fee at 3% will be $150.  Therefore, you need to calculate whether not having to pay interest on your balance for the interest free period will save you more money than the transfer fee.

Using the $5,000 balance transfer example, if you cannot pay down that balance and interest continues to accrue at 10% per month (a low interest rate) for 12 months, the interest you would pay would be approximately $500.  Therefore, clearly in this example, the transfer fee is well worth getting a 0 balance transfer credit card.

3.  Annual fees

Fortunately, most balance transfer credit cards do not have an annual fee.  Therefore, unless the perks of a card with an annual fee are fantastic, the best 0 balance transfer credit card doesn’t have an annual fee.

4.  Interest rate (APR) after 0 interest period

Don’t ignore the stated interest rate (APR) when choosing the best 0 balance transfer credit card.  The range in interest rates is huge.  Yes, I know you don’t pay interest for a stated duration; however, at the end of the interest free period, any outstanding balance will accrue interest at the stated APR.  Often 0 balance transfer credit cards have a higher APR than other credit cards (there’s always a catch).

Moreover, if you make purchases with your new 0 balance transfer credit card, you’ll start accruing interest on those purchases immediately.

Important:  be sure to check the APR for cash advances.  Cash advances often have a higher APR attached.

If a low APR is most important to you, then consider getting a low interest rate credit card.

5.  Late payment charges

It’s important that you’re always aware of the late payment charges for any credit card you get.  The same applies to 0 balance transfer credit cards.  Late payment charges can be hefty.

6.  Assess your ability to pay off the balance during the 0 interest free period

The best way to use a 0 balance transfer credit card is to pay off the transferred balance during the interest free period.  Before applying for this type of credit card, assess carefully your ability to pay off the balance during the interest free period.

I’ve used 0 balance transfer credit cards in the past with great success and saved a great deal of money doing so.  However, it’s easy for the strategy to go awry.   The best 0 balance transfer credit card is a personal finance tool that can help you improve your financial situation … when used right and when you get the right 0 balance transfer credit card for you and your situation.

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Should I Have More than One Credit Card?

I used to think it odd when people would have 3 or more credit cards, especially the generous credit limits provided for these days.

For example, consider having 4 cards, each with a $6,000 credit limit.  That’s a $24,000 line of credit you could borrow in no time.  A 1 month luxury trip to Hawaii could rack up those types of charges.

But, then you’re faced paying down $24,000 in debt with high interest rate attached.

As far as I was concerned, one card with a $6,000 credit limit was and is sufficient for me.

Not having a second credit card could be embarrassing

Imagine taking your folks or friends out for dinner.  You make it clear you’re paying.  At the end of the meal your card is declined.  You look like a financially irresponsible person.  It’s not a good scene.  If you have an extra credit card, sure, it doesn’t look good, but at least you can pay the meal with your second card.

My recent credit card fraud protection incident made it clear to me that there sometimes credit cards are denied for reasons other than not making payments or spending the full credit limit.

I don’t use cash much; instead I rely on credit cards.  If a card is declined for whatever reason, having a second or third card is handy and can get you out of a jam.

3 reasons to have more than 1 credit card

  1. It’s handy to have in case the other card is declined for whatever reason (fraud, limit reached, technical difficulties).
  2. You get a second card for a strategic purpose.  One strategic purpose is stopping interest accrual if you have a hefty balance.  The way you can stop interest accrual for a set amount of time (usually up to 12 or 15 months) is getting a 0 balance transfer credit card.  I’ve done this for strategic purposes more than once in my adult life and it worked great (I’m a huge believer in 0 balance transfer credit cards).
  3. You find a credit card with outstanding rewards such as frequent flyer rewards, hotel rewards, gas rewards (gas rewards are good given the high price of gas these days).

1 reason not to get a second or subsequent credit card

To get more credit because your existing credit card limit is maxed out.

If you have one credit card that isn’t maxed out and is used responsibly, then consider getting a second card because you never know when your sole card may be declined for any reason.

Filed Under: Credit Cards Tagged With:
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