Dave Ramsey is not a fan of balance transfers.here’s why

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Are balance transfers a good solution for debt? Maybe not.

Key Point

• A balance transfer is a good way to consolidate your credit card debt.
• Dave Ramsey believes that moving balances is just a way to move debt.

There may come a time when you find yourself juggling several different credit card balances at once. Or maybe you just lost track of your spending.

In either case, if you have a string of credit card debts to manage, you may be considering a balance transfer. Balance transfer allows you to transfer your existing balance to a new credit card so you can focus on paying that single balance.

It will make your life easier. In many cases, using a balance transfer offer will bring him 0% referral fees on a new card. That way, as you reduce your debt, you might accrue a little less interest.

But while a balance transfer might seem like a good solution to solve your credit card debt problem, financial expert Dave Ramsey thinks the opposite. And you might want to take his advice to heart.

Disadvantages of balance transfer

Why is Dave Ramsey against balance transfers? The reason is simple. Ramsey hates debt and believes consumers should avoid it at all costs. Even if you do a balance transfer, you can’t get out of debt. It just changes the way debt is stored, so to speak.

As Ramsey notes on his blog, “Migrating credit card balances is just one way to keep yourself stuck in a debt cycle.” This is a very difficult cycle to break out of.

Additionally, balance transfer offers typically start off with 0% interest on the debt, but tend to use up that referral interest rate eventually. When that happens, they are often subject to floating interest rates that can actually rise over time.

Also, balance transfers are usually not free. Credit card companies charge a fee for the option to transfer debt. In the same way that Dave Ramsey is not a fan of interest, he is not a fan of fees either.

What’s more, Ramsey warns that if your credit score isn’t already in pretty good shape, you might not even be eligible for a balance transfer in the first place. Also, if you have a lot of debt, it’s more likely that you’ve had some credit score hits.

Please proceed with caution when performing a balance transfer

Ultimately, Dave Ramsey believes consumers shouldn’t be in debt. So his financial advice is usually focused on doing what you can to avoid it.

But if that ship has sailed and you need a way to pay off your debt and keep it manageable, a balance transfer could be a good solution.Planning to free up cash to pay off debt . That could mean cutting your spending significantly or taking another job to increase your income.

Ultimately, your goal is to pay off your debt as soon as possible. If you can do that with balance transfers, it might not be such a terrible choice.