Moving the debt is just the first step. Have a game plan for paying down the balance before the interest-free period ends.
Of the debt held by the major credit card issuers, 82% of that amount is revolving — that is, carried over from month to month — according to the 2023 Consumer Credit Card Report from the Consumer Financial Protection Bureau. The same report found that 1 in 10 personal credit card accounts are charged more in interest and fees than is paid toward the principal each year.
For example, if you owe $15,000 on the credit card after the balance transfer and the 0% APR period is 15 months, you’d have to pay $1,000 per month to zero out the debt before the term expires.that you’ll likely owe. This fee, typically between 3% to 5% of the transferred balance, can be costly. For a $15,000 balance, a 3% fee would add $450 to the debt amount.
As of February 2024, the average APR on interest-accruing credit cards was 22.63%, according to the Federal Reserve. Credit card interest rates will generally be much higher than the APRs on other debts such as a mortgage or car loan, so it may be best to eliminate the debt on the balance transfer card first, even if it isn’t your highest-interest debt.
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