Is Debt Shuffling Worth It? 0% Transfers
Every time I turn around, I’m reading about someone playing the debt shuffle game - 0% balance transfers. I’m starting to wonder if it is something that’ll help or hurt our situation.
I’ve avoided trying this tactic for a while now because I’m always worried that I’ll miss something in the fine print and it’ll turn around and bite us. Of course, I’m sure there are positive reasons for taking the leap, but I’m still pretty nervous about moving debt from one card to another. Additionally, since we are trying to get a house, lower utilization on each card is important to us. We don’t want to end up getting hurt by a high balanced (low interest) card.
But, some of the offers are very tempting. Especially the 0% for 6-12 months and then 3.99% fixed thereafter. When our lowest rate card is at 8% and highest is above 13%, 3.99% looks pretty good. Of course, we must also factor in the transfer fee (usually 3%, some with/without a fee limit) into the interest rate.
What has your experience been? Is it easy to make the transfers? Was it worth taking that step?
mapgirl
April 13th, 2007 13:09
Mixed bag. I’m doing it now, but I’m wondering if I should shuffle the debt again to another 0%BT, or just pay it off little by little. Usually the transfers are easy, just make sure you have a little payment to send in case the BT doesn’t come through in time.
Donna Jean
April 13th, 2007 19:27
I wasn’t planning on doing a full balance transfer, just skim a chunk of the 13.99% card and toss it over to a lower rate card.
Rob Carlson
April 16th, 2007 10:23
The trap is the moment you feel that the money you got from the 0% belongs to you, you will use it for “important” stuff and then wind up short when the interest kicks in. One month of 21% APR knocks out several months of 4.5% APY very quickly. If you need to, open another account just for 0% transfers that you don’t touch except to pay the balance in full when the 0% is over.
MSMomsmoney
April 16th, 2007 13:58
To me yes it is worth it.
I just recently got a Discover card. I transferred the remainder of my car payments on to it ($4K at 7.3% to Discover 0% for 12 months).
I’m saving some money, I am automatically putting the payoff amount into my ING savings account, minus the minimium I am paying them.
That way I will earn a little interest too.
Oh, and cut up the card, if it’s going to tempt you.
The only draw back I can see is, if you are going to be making a major purchase soon, it may lower your credit score, and/or if you will be tempted to spend on the card and increase your debt load and/or you don’t pay your bills on time (set it up automatically).
Good luck whatever youd ecide.
Donna Jean
April 16th, 2007 21:13
Thanks for the feedback, I think we might try the balance transfer after we get the house. I’m not comfortable with the pulling out cash options and stashing it away or using it on something else, nope, no way. Just a portion of one balance being bumped over to another card. I see others doing the transfer withdrawals/earning interest games and I’d not be able to sleep at night if I tried something like that.
Mike Collins
May 1st, 2007 12:36
Awhile back I transferred a balance to a new Discover card that offered 0% for life. All I have to do is make 2 purchases per month to maintain that rate until it’s paid off. I can play that game…once a month I go to the store and buy two packs of gum with my Discover card. Just gotta be very careful not to forget making those small purchases.
I had received that offer in the mail, but you may be able to find it online at their site too.