Once you’ve made your mind up to pay off credit card debt, you will likely want to look at 0% balance transfer offers as an option to make paying off high interest debt quicker and less expensive.  If you’re unfamiliar with credit card balance transfers, you may be surprised to learn there are fees associated with moving a balance from one card to another. The question is, are these fees worth paying?

Most 0% Balance Transfer Offers Charge Balance Transfer Fees

It may seem counterproductive to move a high interest balance to a 0% balance transfer credit card if you have to pay a fee to make it happen.  Most balance transfer offers charge a balance transfer fee ranging from three to five percent of the total balance transferred.  When choosing a balance transfer offer, look for cards offering 0% for a minimum of 12 months and a balance transfer fee of three percent.  The only time it makes sense to consider a balance transfer offer with a higher balance transfer fee is if the 0% interest period is longer than 12 months, for example, 18 or 24 months.

Balance Transfer Fees Are Less Expensive Than Paying High Interest Rates

When you think about transferring a balance from a credit card charging 15% interest or more, you may be hesitant because of the balance transfer fee, particularly if you have a high balance to transfer.  Moving $5,000 from a high interest credit card to a 0% APR balance transfer card with a 3% balance transfer fee will cost $150.  The more you transfer, the higher your balance transfer fee will be. However, in the course of one year at 0% interest, you could  save between $400-500 in interest charges on your $5,000 balance.

Therefore, don’t rule out the possibility of a balance transfer offer just because it charges a fee.

When Paying Balance Transfer Fees Does Not Make Sense

As mentioned, there is often a good reason to pay balance transfer fees and still save money over the course of repaying the balance, but it isn’t always your best option.  For example, if you have a credit card with a balance that you could pay off within three to five months, you probably don’t want to pay a fee to move the balance to another card.

Make your payments immediately and pay it off, and you’ll avoid a balance transfer fee and reduce what you pay in interest without having to move the balance from one card to another.  If you need to wait a few months before you can pay the cards off though, it can still save you money to transfer the balances while waiting for your chance to send the lump payments to pay it off. As a rule of thumb, if you can’t make a substantial payment or pay off your cards by more than 50% in three months, then you’ll likely benefit from a balance transfer. If you can do it in less time, then stick with your current card.

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