Myth of 0% Balance Transfer for Life Deals
I just received another one of those credit card offers in the mail. What was different this time is that fact that they stated I would get a 0% apr for the life of my balance transfer!
So I checked the terms and conditions in greater detail and this is the fine print that I found out. Well, it turns out that you do get a 0% apr on your balance transfer for the life of your balance. However, there is a catch. You would have to charge at least two items to your card at least once a month. And every month, you would have to pay a minimum balance (say 4%). The minimum payment that you pay will first go towards paying the balance with the lowest rate (aka – your balance transfer at 0%). Meanwhile, your two items that get charged to your card the first month accumulates interest payment. After one year, you would have spent twenty four items on your card that are carrying interest.
If you pay the minimum payment of 4%, you will finish paying your balance transfer amount in 25 months (actually, it is slightly less than 25 months because your total balance would increase given that you have to spend 2 items a month on the card).
So what is the big deal you say? Why not just two packets of chewing or Hershies chocolate bars every month and you will be fine. Actually, you may not be fine, you almost have to a few more items just in case the second item does not get registered (computer mistake) and you lose your 0% deal. Secondly, chances are that you will spend more than two items on the card you could end up ing more things that you want simply because you want to maintain the 0% apr deal.
I have always maintained that getting a 0% balance transfer deal makes sense when you have a lot of credit card debt that you would like to reduce or eliminate and you still have good credit. The trick to using this technique is to take the money you have saved from the 0% card and use it to pay the balance on your card with the highest interest rate. Wash, repeat and rinse, and you will be able to figure out how long it takes to reduce your credit card debt.
0% apr for life of balance card complicates the matter because you are forced to use that card, when all you want to do is to pay the minimum and focus on paying off the card with the highest interest rate.
Lastly, there is no such thing as 0% apr for life of the balance. You HAVE TO pay the minimum payment anyway (4%). This works out to 25 months (slightly longer than 2 years). My suggestion is that if you are looking for a 0% apr card and you have a good credit, try to get one with an introductory period of at least one year (with no strings attached). The 0% apr for life of balance deal that I got would complicate matters because I am forced to use the card. Furthermore, it is never for life (only about 2 years!).
Recommended Credit Cards For Balance Transfers
If you have credit card debt and are looking for to reduce your interest payments and apply the debt snowball method, then I suggest you check our list of the best balance transfer credit cards for the latest offers.
Note – – Life of Balance Transfer Deals are no longer offered today.