Balance Transfer Cards with Catriona & Sam
On this episode of Financially Naked: Stories from The Financial Gym, two Certified Financial Trainers, Sam and Catriona, are here to gymsplain balance transfer cards. They start by explaining what balance transfer cards are and how they can be used to manage and pay off high-interest debt. Throughout the episode, Catriona and Sam talk about the importance of being mindful with balance transfer cards, understanding your specific debt, and the role of developing better habits and financial planning when addressing debt and financial health.
Podcast Notes
Balance Transfer Cards: Catriona and Sam start by gymsplaining what balance transfer cards are and how they work. They can be a tool to help you pay off debts through a promotional period with little or no interest on a different account.
Possible Offers: Balance transfer cards offer deals for new cardholders or existing account holders. For a fee, you can transfer debt from one high-interest credit card to a new card for 0% interest for a certain period of time.
Purpose: If you have high interest rate credit card debt, it can be hard to pay down the principal balance if most of your payments are being applied to interest. A balance transfer card allows you time to work on that principal balance.
Timing: If you open a new line of credit, your credit score may dip. If you plan to apply for a lease or mortgage in the near future, it might not be the best time to open a new line of credit.
Fine Print: It's crucial to check the fine print of any balance transfer card to avoid unexpected fees or unfavorable interest terms after the promotional period. A Certified Financial Trainer can help if you're unsure what's best.
Being Mindful with Balance Transfer Cards
Paying Off Debt: Balance transfer cards can help pay off high-interest debt. Debt is not inherently bad. It is a tool. It's about how you use it and finding the right tool for your situation.
Transfer Fees and Interest Rates: Balance transfers usually have a small fee, between 3% and 5%. This fee is added to the total balance once the transfer is complete.
Existing Offers and New Applications: Sometimes, it's better to use offers on your current cards than apply for new cards. For example, if you have a balance on your Chase card and have a Discover account, Discover may offer you a balance transfer.
Spending Habits and Planning: Once a balance is transferred, it's vital not to rack up new debt on old cards. It's also important to address the reason behind the debt when planning how to pay it off and move forward.
Seeking Support: If you feel overwhelmed by your debt and the options available, working with a professional can help. A Certified Financial Trainer can help asses your overall financial health and goals. They'll help you choose the right tool and work on your overall financial health.
Finding and Applying for Balance Transfer Cards
Resources and Tools: Check your existing cards for offers. The BFF Approved Page is a great place to start. With a few details, the card matching tool can prequalify you for new cards.
Credit Limits and Personal Loans: Ensure the limit on the card you plan to transfer over to can cover the entire balance. If your debt is above $10,000, a personal loan might be a better option. If the limit you are given isn’t enough, call and talk to someone.
Application Process: Depending on your credit score and income, you may have to research a few cards before finding the right one. Don't panic if you aren't approved right away. There are always options, and it's about finding the best fit for your financial situation.
Post-Transfer Plans: The goal with a balance transfer card is to pay the balance before the end of the promotional period. If you're not able to, that's okay. Pay as much off as you can during that time. You can always transfer the remaining balance to a new card if needed.
Final Thoughts
Credit Score Impact: Be mindful of how new applications and closing accounts impact your credit score. A slight dip is not critical unless you're planning major financial moves in the near future.
Changing Habits: Transferring the balance is just the first step. If you spend more than you earn, a balance transfer is just a band-aid to a larger issue. Understanding where the debt came from helps you create a clear plan.
Debt is a tool: Debt is just a tool. If you have debt, that is not a financial or moral failure. There are other tools out there that can be used to help you pay down the debt.
Have a plan: If you need help creating a plan or someone to hold you accountable, a Certified Financial Trainer can help! What's best for you will depend on your current situation and goals. A Trainer can help you laser-focus and create a plan that fits your life.
If you want to work with a Certified Financial Trainer to help navigate your finances or pay down debt, schedule a free warm-up call today! If you have any ideas or questions for the show, send an email to trainerpodcast@fingyms.com.
Resources
Meet The Trainers
Meet Catriona Williams, Certified Financial Trainer
Meet Sam Cash, Certified Financial Trainer