Debt Monsters

Big Facts or Myth? 5 Ways How Balance Transfers Can Pay Off Debt6 min read

Reading Time: 5 minutes The first step to building wealth starts with dispelling myths and eliminating rumors. Find out how you can pay off debt through balance transfers.

September 14, 2020 5 min read
Balance Transfer

Big Facts or Myth? 5 Ways How Balance Transfers Can Pay Off Debt6 min read

Reading Time: 5 minutes

A balance transfer from one credit card to another is the process of transferring high-interest debts from one more card to another with a lower interest rate. It’s one way of alleviating expensive credit card debt.

Ideally, this method helps pay off your debt faster. This is because the card you transferred to will have a 0% Annual Percentage Rate (APR) and your payment will go towards the principal balance instead of accumulated interest.

This simple move can help you save a large amount of money in the long run. This doesn’t mean there aren’t any dilemmas though. The problem is, the internet is filled with misleading information.
If you want to build wealth, you need to debunk these myths. Before differentiating the facts from the myths, let’s see what goes on in the process.

Why We Recommend These Books

How to Be Debt Free: A simple plan for paying off debt: car loans, student loan repayment, credit card debt, mortgages and more. You can be debt free forever! by Avery Breyer

The road to building wealth isn’t easy. The path is filled with numerous what-ifs that were meant to deter you. You can’t gain wealth without clearing out your confusion. This book does just that.

Making a large purchase without precaution may lead to debt. The misuse of credit cards does too. If you’re smart, you can turn these debts to your advantage and Avery Breyer helps you get on track.

The world of financing is murky without proper direction. The author helps you differentiate between good debt and bad. She helps you understand you can make use of your mortgage instead of letting it gloom over your head.

You can save heaps of money with the right attitude, goals, and decisions. Avery talks about debt consolidation and shares her 3-step secret recipe for success which seems simple at first, but gets more complex once you dig in deep.

The book uses clear and simple instructions that even a beginner can easily pick up. The author vehemently believes that credit cards bring more danger than offer a possible safety net.

You can still build wealth and assets while being in debt. Avery believes her “Power Pay Off Plan” will not only help you save but also successfully get out of debt. The knowledge is at your disposal. You only need to wield it.

The No-Spend Challenge Guide: How to Stop Spending Money Impulsively, Pay off Debt Fast, & Make Your Finances Fit Your Dreams by Jen Smith

Have you been fairly self-indulgent lately? Splurging on yourself and your loved ones is nice until you’re confronted with accumulated credit card bills or even debt.

Jen Smith understands. So in this book, she shares her experience with money and debt, highlights a few strategies you can use to avoid mass-spending, and helps you understand the psychology behind impulsive purchases.

The “No-Spend Challenges” aren’t about reducing the amount of money you’re spending. It talks about how you can redirect your spending in things that will give you returns in terms of profit and satisfaction.

The author urges you to stop spending unnecessarily and to find alternate ways to contentment. Budgeting alone isn’t enough. You have to change your mindset as well.

With this book, you can meet all your financial obligations while enjoying life at the same time. Use the No-Spend Challenges to fast-track your way to financial success and to spend without exceeding your budget.

How Balance Transfers Work

Simply put, balance transfers help you pay off your credit cards with another credit card. You apply for a balance transfer when you get a new credit card. Just make sure you get it through as soon as possible because these things take time.

Decide how much you want to transfer and refer to your issuer. Depending on what the current state and stability of your financials are like, your issuer may approve of the full amount or opt for a partial one.

There are some things you should consider before applying though.

1. The Period of the Offer

Keep in mind that the 0% APR rate is meant to be a promotional offer and is set for a certain period only. So you have to try to repay your debts within that time.

2. The Fees

No good thing comes without a cost and most balance transfers have a fee. So if the transfer is cheap, go for it! If it’s not feasible, stick to your current credit card.

3. The Transfer Limit

Most balance transfers come with a credit limit, meaning you can transfer only a certain amount of your current balance. So if the stakes aren’t worth it, don’t make the change.

Facts or Myths?

1. Fact: Balance Credit Cards Help Manage Your Debt

This transfer will help you manage payments and consolidate your debt more efficiently. This tool will work for you only when you use it wisely. So don’t forget to do your homework before making a balance transfer.

2. Fact: High Credit Card Limits are Good

They’re only good if you make proper use of them This comes as an advantage because your credit scores are based on your debt-to-credit ratio. So keeping a low balance will improve that ration, which in turn will improve your credit score.

3. Myth: There’s Always a Balance Transfer Fee

Most balance transfer cards offer a low APR for a short time. These usually come with a balance transfer fee and the amount isn’t low. It’s usually 5% of your entire balance so that dampens the whole process a bit.

Some credit cards come with this fee at all, but they usually don’t offer a low APR either. This is where you do your research and choose the offer that works best for you.

4. Myth: Purchasing with a Balance Transfer Card is Cheaper

It is anything but. These cards are meant to help you eliminate debt and by no means are they ideal for purchasing. Not only will you be increasing your debt through spending, but you’ll also be subjected to high-interest rates.

5. Myth: Say Goodbye to Old Credit Cards After the Transfer

You shouldn’t close your old credit cards because these cards will help you build your utilization rate. The banks will be more inclined to help you in your future endeavors this way.

Bottom Line

Credit Card Debt

Credit card debts are dangerous, but interest rates are even more so. You’ll never know when it catches up on you and putting it off is a recipe for disaster. Balance transfers prevent this situation if you follow the right protocols.

Getting another credit card to pay off your existing credit debts is counter-intuitive but effective. Research the myths and find the truth behind them. Simply getting a balance transfer card isn’t enough.

It’ll help you avoid interest payments but won’t eliminate your debt. You still have to make your monthly payments and you’ll eventually have to deal with interest rates. Make use of the initial APR offer and use a balance transfer to pay debts!