June 17, 2024

(InvestigateTV) — Consumers typically pay 3-5% in fees on a credit card balance transfer, according to Bankrate, but those fees might be worth the cost to some consumers.

Leslie Tayne, a debt relief attorney with 25 years’ experience, said balance transfers could be a great opportunity to reduce interest rates.

Those looking for a balance transfer opportunity should ask themselves why they want to transfer the balance first, according to Tayne. This question is essential in determining if it is the right financial tool for them.

“A balance transfer card is just that, it’s a financial tool to help you achieve financial goals,” Tayne explained. “One of them would be to pay off your debt sooner and reduce the interest. However, because of the fees range between 3 and 5% on the balance transfers, you might find that within that introductory period that that 3 to 5% of the balance transfer actually exceeds the interest that you would be paying on the current card that you have.”

Tayne said be sure to calculate what those fees are going to be before saying yes.

“Also, when you apply for a balance transfer, two things happened on your credit,” said Tayne. “One, you’re opening new credit, which will be a hit on your credit. And two, you’re paying off any other card, which also reduces your credit score, at least.”

She also said people should be sure that they are going to be able to pay off the balance within that introductory period. The longer the introductory period, the better.

She added that people don’t want to be waiting until the end of an introductory rate period to pay something off because life happens, and other expenses could come up during that time that interfere with that goal.

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