0% APR | 18 Months | 2% Transfer FeeSubmitted by Financial Planning Solutions, LLC on November 16th, 2017
We all get these offers in the mail that at first glance, sound pretty good.
The way this credit card transfer offers work is this:
- You transfer a current balance on a credit card that you own to this new one
- You pay a 2% transfer fee. (I had a client recently that wanted to transfer $30,000). In her case, it would have cost her $600 so her new card balance starts off at $30,600
- The premise is you will pay this card off in the 18 months because if you don't, the interest rate goes from 0% to 16.65% (on the offer I recently received)
- So, in this case, if you wanted to pay this card off in the 18 months, you would need to make monthly payments of $1,700. ($30,600/18)
- Here's the problem, most can't pay the $1,700 so they pay less. Maybe $200. 18 X $200 = $3,600. This leaves a balance of $27,000 in the 18th month.
- You are now paying 16.65% on this $27,000.
Before taking on one of these offers, please reach out to me.We may have better ways of reducing or eliminating these balances.
We are here to help.
All the best.
Rick Fingerman, CFP®, CDFA®, CCFS®
Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.