Balance Transfer

[amelia06]

Is balance transfer a good option to pay off credit card debt? 

[Opus 17]

It can be a helpful strategy, but it won't lower your score much at first, and it's not really a "payoff" if it's a transfer, is it?

Suppose you have 5 credit cards with balances totaling $10,000, and you open a new card with a $10,000 limit and transfer all the balances.  Now you have 6 credit cards and your overall balance is still $10,000.  This will reduce your credit score in the short term, not raise it.

If you pay off the new card without adding more debt to the old cards, your score will improve and you really will be paying off your debts.  If you only make small payments on the new card and add more debt to your old cards, you will be in the classic credit card death spiral. 

It probably only makes sense to do a balance transfer if the new interest rate is significantly lower than your current rates and you think you can pay off the new transfer before the rate increases.  The only real way to pay off credit card debt is to stop spending more than you can afford.

[CoachKristine]

@amelia06 

Amelia,

The short answer is no, a balance transfer is not the best way to pay off credit card debt. All you're doing is chasing your tail by not addressing the underlying issue of why you got into debt in the first place.

The better answer is cut up the credit card(s) you are using to create the debt, and to pay off the debt as fast as you can. Throw all available money at the smallest debt first, while paying minimums on the other debt. As you pay off each debt, add that amount to the next debt. This gives you the snowball effect.

If you'd like to see how powerful this can be go to Kristine's calendar and schedule a phone appointment and we'll go from there.

Good luck!

Kristine

Advocate Financial Coaching 

[Dreonna181]

Turbo tax refund 

[xmasbaby0]

@Dreonna181 

What?  You posted to a thread about credit card debt--and your post says "Turbo tax refund."

What is your question ? Do you think you are supposed to get a refund from TurboTax for your software purchase for some reason?  Or are you asking about your income tax refund--which comes from the IRS and/or your state?