Is Dave Ramsey correct about balance transfer credit cards?

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Following Dave Ramsey’s advice on balance transfer cards can be costly.

Key Point

• Dave Ramsey says balance transfer cards are absolutely worthless.
• But with a balance transfer card, you can save on credit card interest.

A balance transfer credit card is a popular tool used to help pay off debt. Many people with credit card debt use balance transfers to reduce interest costs. This process involves obtaining a new credit card that offers 0% interest on the transferred balance and transferring the debt from your existing credit card.

Credit cards tend to charge very high interest rates, so moving your balance to a 0% card can significantly reduce your loan fees and lower the cost of paying off your debt. Balance transfer cards usually charge a small fee, such as 3%, to transfer your balance, but it’s true.

However, while some financial experts recommend using balance transfer cards to aid in the process of repaying debt, others do not. Guru Dave Ramsey argues that the balance transfer offer is not worth taking. Here’s why:

This is what Dave Ramsey says about balance transfer cards.

Ramsey has made a clear position on credit card balance transfers. He said it was “absolutely” not worth it because “transferring debt from one credit card to another does not solve the debt problem.”

Instead, Ramsey said the balance transfer created a “false sense of security” by making people feel like they were solving their debt problems when in fact they would be paying their bills for longer. I’m here.

And he warns that the trial rate will only be in effect for a short period of time.

Ramsey also warns that card issuers are looking to profit from balance transfer cards and could be hit with initial transfer fees, penalties for non-payment and high interest rates after promotions. .

Is Ramsey correct?

Ramsey is correct about some aspects of the balance transfer card. If you don’t pay off your debt before the initial 0% interest rate ends, you’ll eventually face higher interest rates, and late payments will require you to pay both upfront fees and additional costs.

However, none of these are valid reasons not to accept a balance transfer offer.

The credit card you currently owe money to is probably Also is a floating interest rate, already charge high interest rates. If you can get this rate down to 0% for a period of 1 year to 15 months (which is when most promotional rates last), you can definitely pay off your debt cheaper. Also, paying a small fee of 3% to 5% for the ability to reduce interest rates to 0% is usually well worth it.

Ramsey’s best argument for balance migration is that it seems like you’re doing something about your debt when ultimately the only way to effectively handle your card balance is to make a plan to pay it off in full as soon as possible. It means that it can make you feel good.

But if you’re serious about getting rid of debt, living on a budget, and making additional payments to your loan while avoiding borrowing more, why not take advantage of card offers that increase the chances of each payment? You can move to your principal balance and get into debt faster and less.