A while back, I mentioned that I applied for and received a new credit card with a 0% balance transfer offer for 12 months with no balance transfer fee. In the world of credit cards these days, that is a pretty darn good deal. I was hesitant, though, to put all of our credit card debt on that single card.
I ended up having the credit card company send me a balance transfer check for $20,000. I deposited it into my personal account and I distributed it to the three companies that make up our credit card debt (one credit card, my Prosper loan and our IRS debt).
At first glance, it seems like an easy enough decision. Putting all of our credit card debt at 0% interest makes sense mathematically. But personal finance decisions aren’t cookie-cutter. There are other things to consider besides the math behind it. Here’s a few examples of what went through my mind:
- Does this card have a universal default clause? (No.)
- Does this card have an existing balance? (No, it’s a brand new card.)
- Can we handle a huge payment due at one time since it will be on one card? (Our debts now are all due around the same time of the month so we can handle it. We could also choose to send payment twice a month or even weekly even though it is due monthly.)
- If something happened to me with all of the credit card debt in my name, would that impact my husband negatively? (Well, as far as I can tell, in Michigan it will affect my husband regardless.)
- How much of the balance could we pay off before the balance transfer period is over? (I’d love to say all of it, but I’m really not sure how much we’ll be able to pay.)
- If we can’t pay the entire balance before the period is over, how bad will the interest rate be? (The rate on the balance after the balance transfer period will be around 15%.)
- Will there be options after the balance transfer period to transfer the balance again for a lower rate? (I hope there will be since we will have a few cards with zero balances. But you never know.)
After thinking about all of these things, I decided to go ahead and transfer all of our credit card debt. According to this nifty calculator, I see that I will easily save over $1,000 in a year by doing this move.
Things could go sour and after a year we could have our entire credit card balance at 15%. Or, things could go well and all of our credit card debt could be paid off (which could happen if my husband got that job we are still waiting to hear about). With life, you never know what is going to happen. So in the end, I decided to go for it and save over $1,000 and go from there.