Thoughts On Balance Transfer Credit Cards
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- Опубліковано 5 жов 2023
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Generally like their advice but totally off base here assuming your only goal is to pay down your debt and not use any additional credit. 0% for 21 months can be a lifesaver
Exactly right
Yes BUT only if you’ve already fixed yourself so that your spending isn’t the problem anymore. And if you don’t KNOW you have done that then you haven’t.
Also you should be looking forward to cutting up the new cards the day they arrive, and closing the old accounts as soon as the balance transfer goes through. I don’t mean “oh this is what I need to do to stay healthy” I mean genuinely looking forward to it because you get the feel-goods from saying bye bye to unused credit limits.
Ridiculous advice.
Both can be true. Yes 5% of $10,000 is $500, but 27% of $10,000 is $2700. By not regrowing the debt by $2200 you would basically save close to $600 in interest the next year. Wht is Ramsey's advice always built on the premise that people are stupid and remain stupid even when they realize they must change?
You got a point, but fr it was stupid in the first place to get in debt, like buying shit you can’t afford and having to finance it is down right stupid.
Decision paralysis. Not a fan of how he talks to people but I agree with him. Figuring out how quickly you need to pay off 27% API to beat out a 5% up front fee and making your decision based on that can be mentally exhausting (you should be using that mental energy to make a budget and get out of debt) but it also distracts you from the core problem, which is over spending. No amount of balance transferring will fix that.
It's also mentality. Thinking you can make thinks easier by getting more credit cards eats away at the spirit and mindset that's actually needed to succeed. It's not always going to hurt you but for a lot of people it's a slippery slope from "I'll just transfer the balance to make paying off debt easier" to "if I keep transferring the balance I'll never have to pay off debt". If you have $10 grand in credit card debt you shouldn't be looking for an easier way to keep up your excessive lifestyle, you should be changing your lifestyle and living within your means.
The simplest solution is to spend less and pay off the debt as quick as possible. How much you save from transferring or not transferring won't matter in the long run once you get your finances back on track.
He's just being realistic. People are stupid, even when they're not.
I've paid off mortgage debt on 0 % interest cards. Just have to be diligent.
Imagine a doctor telling you that “you’re not getting morphine because that’s not the root problem”
But a generous amount of cards now days don't charge transfer fees. So does that mean they aren't bad? Because I'd rather transfer $10k from a 29% apr to a 3.9% any day even with a fee.
I helped a friend who had 11k in credit card debt get out of credit card debt by utilizing a zero fee balance transfer card. Main point is that he was really motivated to get out and it saves him thousands.
That is the mentality that will get you in debt. He didn’t save thousands, he didn’t save anything, if he had to go to the trouble to get to it help, I’m guessing he already paid thousands in interest
@@Oppinnindi well specifically saved thousands in interest he was able to put back towards debt. The main key is that this person was motivated to get out vs. Somebody who was looking to string it along further.
Your friend did save, he’d have taken longer and paid even more interest if he stuck with previous set up
I did this to pay off a large debt. The cards I used had zero fee and zero interest for a limited time. I had to transfer several times to pay it off in full. If you're disciplined and organised it works great. If you're not do something else.
Yes, do it. Even with the fee, it might come to less.
These people say to cut what you can from your budget.
They're trying to cut interest from their budget. Now they don't like it.
😂😂
Right because in 3 months you have broken even and now you are saving money on interest
They are trying to help.people get out of the mindset of financing everything
This is where Dave looses some cred in the personal finance game. If you are committed to paying off your cards and will cut it up after the balance transfer, that 3-5%, which can sometimes be 0%, is a lot cheaper than a year or 18 months with 29% APY on the cards… of course if your going to keep spending it’s stupid. But that $300 fee to transfer $10k, could easily save $3000 worth of interest over the year you are paying your debt down….
Behavior, has nothing to do with interest rate
@@moggekungen the questioner clearly has the motivation
I love the Baby Steps but if you only have a $500 BT fee then thats less than paying the interest on a 28% card for 12-18 months. If you do this right it can help you. Personal finance is PERSONAL. Do what's best for you!
so keep paying 28% interest rate, looking at the mirror, and self deprecating. Yes. Makes sense.
Solution: Cancel the card once the transfer is complete.
Cancel them all. Yep.
But as he said, there is a fee you pay to use them
@@Tonyrd3000 I doubt it’s as high as 23% over 1 year
Or destroy it/lock it away and keep the account open just for the credit history.
I have a card with just 1 reoccurring $15 charges on it that has an automatic payment set up for the day after. I don’t actually have the physical card and more and will destroy or lock away the next one they send me because I don’t need it for anything other than to keep my score high 🤷🏾♀️
Really depends on the terms here + your current interest rate and the amount currently owed. I’m not a fan of balance transfers either, but sometimes in order to make progress you got to stop the bleeding.
If your 0%APR period is going to be 15-18 months and the balance transfer fee is going to be less than your month interest rates then absolutely do it.
And of course address your spending habits that got you to this situation in the first place too
This is actually good advice. The part they left out was that once you do a balance transfer you now have a credit card that you can spend on again. And sense they haven’t solved the root problem they likely will and add even more debt to the mix.
Paying off a high interest credit card also means you still have a credit card to spend money with again, and it still has a very high interest rate. Ramsey's take is geared solely on the mindset of just paying off the card, and not taking into account on what amount of usury that will while mean for the debtor. Pissing away money for a high interest rate is just dumb.
It's bad advice.
How do they know they haven't solved the root problem? This could be a caller who has seen the error of their ways and is in the middle of debt paydown.
Their logic: You’re too much of a child to pay no more interest and consolidate your existing debt, so keep paying more interest but still cut your expenses down to eating air and sleeping outside on the sidewalk.
3 - 5% is better than 30%.
I paid off my debt at 0% interest for 18 months. Imagine how much money I would have wasted by following this extreme advice. How many people got priced out of the housing market and 2.5 interest rate by following Dave Ramsey’s advice?
Finally a credit card video I agree with. I buy everything one my card and pay it off. Travel for free. But if you are transferring balances you have gone far a stray
The key is when transferring to the 0% interest for 12 mths or whatever term not to use that card for new purchases. Any new purchase will accrue interest the first day it is charged. Payments goes to pay off the 0% first before the balance that accrues interest.
Also, the cards that were transferred from is to not use them until after 2 full billing cycles. Pay off the interest they add until it goes to zero balance.
Its good for small balances, like under 5k, and you can pay it off it under a year. Outside of that, its likely not going to be a great solution.
Hes only talking about people with bad spending habits. People who use credit cards and balance transfers responsibly greatly benefits from lines of credits.
Agreed.
I understand the thory behind what hes saying but lets say you already resolved the man in the mirror issue and got hold of your finances i think its better to pay a fixed rate on a balance transfer than to pay debt ongoing. The money you save from interest can be snowballed back into the debt so why not.
I disagree. If someone is actively paying off the debt, which sounds like the case, then lowering the interest to pay less is a good idea. Just need to make sure it's a net positive savings if there's a transfer fee.
IMO they answered as tho it was someone actively still racking up debt not someone working to pay off debt.
$10k on a credit card, you will pay $500 in interest, in 2 months. Unless you can pay it off quickly. It might be a good idea, to save a few thousand.
Only problem is that you dont feel the pain of paying that $3,000/yr in interest.
Definitely worth it if you’re gonna aggressively pay it down and already instilled habits of not spending money that’s not yours. I barely use my cards now, just paying interest is hurting costing me thousands in the long run. I’ll pay that fee thanks
Don’t really like taking advice from people blaming me for my financial situation when I’m just looking for advice :/ I haven’t used my cards in months, but the interest rate is so high and I lost my job. Only just now started a new job which doesn’t pay enough to pay the full balance while my interest rates keep going up. I don’t spend, yet here I am. Your advice wasn’t helpful, it was condescending and rude and not a great way to actually help people struggling with debt.
I wholeheartedly disagree. If you truly believe you can pay the debt off in the 12-18 months they are offering you 0% you should do it, if you will still be motivated to pay it fast, and if the interest rate is high you will be paying mostly interest anyway, so if you put the same amount toward the debt that you would have otherwise you will be paying your actual principal off and not the interest. The advice makes no sense unless you have 0 discipline.
They have to be steadfast in their convictions and principals because it is their brand and for a good segment of folks its true. Many people struggle to generate the surplus of income above their spend rate to stop the debt cycle.
But the math is obvious, transfering down from 20%+ amortizing interest to a 3% fee and 18 month+ no interest rate is a prudent move for people with the other aforementioned issue already addressed in their final push to more quickly/less costly get out of debt.
I like rice and beans 😏
The less usury you have to pay, the better. Telling someone to not do something that will end up having them pay less in interest (e.g. just pissing away money) is really dumb, especially if the cited reason is that they'll probably just spend again. Paying off a 25+% interest credit card could very well mean they go back to using that again.
People really asking anyone on the show what they think of a credit card. Are they expecting there to be a positive response at some point? 😂
Yes it is a good idea these two men are wrong on this
Lol so paying 28% is better than 3%. Got it thx
Nah these guys are wrong. This is how I got out of debt. Paid off the transfer in the time window. And when I need to make a big purchase I put it on another balance transfer card and again pay it off in the 0% time. These idiots talk like you literally count every penny. Talks about a 3-5% charge, what about the amount of gas you lose by taking your kids to school? Or the amount of money you can save by living in darkness? Like ya no shit there's going to be costs, that's part of life, those costs become less important when you're out of debt.
Don't listen to these idiots in their ivory tower. Be disciplined and pay off your debts and use credit cards like this to your advantage to help you get out of being lower income.
If I a snow blower for $500, and I go plow multiple driveways, I can make that money back and then some! So that the 3-5% doesn't mean a damn thing. Don't just listen to 1 person. Learn how to be financially literate. These guys are the same dickheads that tell you how to get rich quick.
The best way to get out of debt is to acquire more debt... LOL
this is the worst advice they have given. of course you should move it the 3-5% fee will almost always be less than however much in interest you will pay over that time period. yes obviously you don't want to be in debt but at that point it is too late.
But people do have to eat, broke or not.
I cant live on rice and beans... my physical and mental health would collapse and id be on insulin
🤔 True ⁉️
dude knows nothing. most 0 percent offers are also no transfer fee.
Absolutely not true…. Balance transfers work great for getting out of debt as he hammers home to the audience… I crushed it with balance transfers…. 0% for a 12 and 18 month term for a small charge?? Remember pay the “ least” off first according to the steps and continue to pay off with the balance transfers
As much as I respect Dave Ramsey, of a person is serious about getting out of debt, this advice is just plain WRONG!!!