Ask an Expert: Should I Transfer My Balance to a Zero Percent Card?

Photo (cc) by Images_of_Money

A Money Talks News reader recently wrote in with the following question:

I have $14,500 in credit card debt on my USAA MasterCard with an interest rate of 6 percent. My minimum monthly payment is currently $220, 1 percent of the balance plus interest. I am looking at the Discover More 14-month 0 percent interest and no balance transfer fee card. Should I request a balance transfer for the entire amount (it seems pretty high and they might not approve the entire balance) or what I am comfortable paying off – about $500 a month?

Or, should I just chuck that $500 a month towards my USAA MasterCard since the savings of a balance transfer would only be around $1,000 and I would still have to pay my USAA MasterCard (1 percent minimum on $5500 plus interest) on top of the $500 I’m paying on the Discover More card?

And is there a benefit to my credit score for paying off my original credit card instead of having balance transfers on my credit report?

Thanks,
Terri

My response

Terri has a lot of credit card debt, but she is in an interesting position. On one hand, she has a MasterCard with an excellent interest rate of 6 percent. On the other hand, 0 percent beats 6 percent any day. The problem, of course, is that 0 percent is a promotional financing rate that is only valid for a limited time period.

Terri’s right when she says the Discover More card currently offers 0 percent APR on balance transfers for 14 months. But she’s wrong when she says there’s no fee to transfer a balance to this card. Earlier this year the Discover More card did have a no-fee balance transfer offer, but no longer.

The only major card I’m aware of today that doesn’t charge a fee to transfer balances is the Chase Slate.

Since paying a 3 percent fee to transfer her balance to Discover More would cost Terri $435, that’s obviously not a good idea. But what if she transferred to Chase Slate?

Assuming Terri gets approved for Chase Slate, and can transfer her balance to that card, how much should she transfer? Considering that the Slate will have a higher standard interest rate of 11.99 percent to 21.99 percent, based on her creditworthiness, she shouldn’t transfer any more than she can pay off within the 15 months of 0 percent interest. And as with any 0 percent APR promotional balance transfer offer, cardholders are just kicking the can down the road unless they also implement a realistic budget that aims to eliminate all credit card debt.

I am a fan of the Slate card because cardholders can utilize Chase’s innovative Blueprint program. Blueprint’s budgeting and goal setting tools are designed to help cardholders eliminate debt, just what Terri needs.

So, is there any benefit from paying off her original credit card instead of doing a balance transfer? No. The card is being paid off either way, and the source of the payoff does not affect the cardholder’s credit history. And since her overall debt level will be unchanged, there will be no negative effects. In fact, opening up a new line of credit will decrease her debt-to-credit ratio and may actually improve her score, albeit by a small amount.

Terri has gotten herself into debt, but at least she is crunching the numbers necessary to get out as soon as possible. By utilizing promotional balance transfer offers in the most efficient way possible, she can pay off her debt. And so can you.

Note: While we attempt to be completely objective when reporting on credit cards, this site may be compensated by issuers when a reader applies for a credit card through the links within credit card stories or on our credit card search page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
Should You Hire a Service to Negotiate Your Cable and Other Bills?
Should You Hire a Service to Negotiate Your Cable and Other Bills?

Services like BillCutterz and BillFixers will negotiate your cable, internet, phone and other monthly bills in exchange for a share of the savings. I tried it: Here’s what happened.

Watch This: Organize Your Home With Dollar Tree Products
Watch This: Organize Your Home With Dollar Tree Products

Here’s how to organize every corner of your home using only items from a dollar store.

Don’t Toss These 7 Household Items — Sell Them
Don’t Toss These 7 Household Items — Sell Them

Here’s how to earn cash as you give new life to these unwanted items.

3 Good Things About Recessions
3 Good Things About Recessions

We don’t wish difficulty on anyone, but there can be an upside to a down cycle.

How to Get Rid of 6 Hard-to-Sell Things
How to Get Rid of 6 Hard-to-Sell Things

Find out where to sell, donate or recycle items — and feel good about it.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

11 Senior Discounts for Anyone Age 55 or Older
11 Senior Discounts for Anyone Age 55 or Older

There is no need to wait until you’re 65 to take advantage of so-called “senior” discounts.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

9 Deep Discounts Available on Amazon This Friday
9 Deep Discounts Available on Amazon This Friday

These items are all steeply discounted — but the deals won’t last long.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.