Tag: balance transfers

so let's say for example you have right now a $5,000 credit card okay that's the balance on this card you're paying 25% interest annually and that's about a $100 minimum payment every single month you're actually responsible for paying now all of a sudden by Magic you actually get an offer in the mail from a balance transfer credit card and you're like yo it must have been my luck it's not luck it's marketing your information has been sold thus the company knows about it and thus now they're sending you offers Direct offers to you now the offer says this we're going to give you 21 months to transfer your debt over to us and you get to pay it off in 21 months and we won't charge you any interest whatsoever for those first 21 months and you might say well this sounds like a great deal over here I'm paying for example a 100 bucks per month in interest but over here I'm going to be paying Z in interest for the first 21 months this saves me a bunch of money and the only catch is you have to pay a 3% fee for the entire balance transfer now that's not a big deal because right now you're paying $100 as a minimum payment and when you take 3% of 5,000 that's only about $150 or so so it's really not a big deal so why is this attractive what is the problem with it and what exactly is a balance transfer credit card I'm going to go into all the details in this video now do me a favor guys and ask you smash the like button I appreciate it a ton now the first thing is this guys okay a balance transfer credit card I'm not going to complicated it's basically just a credit card that is designed to actually get people that are in debt in some way to transfer their debt over to this credit card and potentially that company be the one that's actually going to get all that interest from you going further it's kind of like a long-term investment okay they're actually betting that you're not going to to pay it off in that introductory period and the TR going to keep the balance and you're going to continue to pay them and pay them and pay them and yes it could actually turn against them if you actually pay but for the most part they get 3% outright and if you don't pay them well you might become a customer for something else you might get another credit card with them or another product or a loan or a mortgage whatever it is okay they have a customer a prospect to get other things that is what a balance transfer is actually good for it now what is the problem here Tommy I still don't understand okay they're giving me an offer if I'm smart and I take advantage of it I walk away without paying any interest isn't that great well the answer is this okay you might think that you're actually going to walk away dilly dally free okay but what happens is usually this what's actually going on when you actually open up a Balan transfer credit card whether it's an offer whether you've been pre-approve approval whatever you just basically you basically just opened up another line of credit that is what's actually going on so let's say for example you have credit card a you owe $5,000 a year and now you actually get pre-approved for a balance for a credit card and then you basically apply and then say hey we're actually going to give you a balance of or a credit line of $7,000 and you say well that's awesome that's more than I had over here so now you say I want to transfer the balance from credit CR card a over to credit card B your new card the balance transer card and by the way it doesn't have to be a credit card it could also be for example Hospital loans it could be any debt overall even Collections and they could actually just basically pay that off by sending them a check and basically now you're in here and the debt is over here that's the whole idea okay so what happens is this okay you say I want to transfer balance from this card over to here they say okay just pay us a 3% fee you pay the 3% fee that's $150 they sent over a check to your credit card okay now that's fully paid off the balance on credit card a is basically zero the balance on your new balance crit card is basically um $5,000 or whatever the balance here basically was that's the idea now what actually happened here okay you went from having a credit line of $5,000 to having a credit line of basically $122,000 remember so if you got in value so far I'm going to ask for a favor subscribe to the channel because only like 20% of the people that watch or actually subscrib so go ahead and subscribe right now cuz I have a lot more content and having a credit line of basically $112,000 remember they actually gave you $7,000 and you have 21 months to pay that off okay without any interest and you might think this is awesome okay what I'm going to do is basically pay this off and never look back but what usually happens is this and I'm sad to say this okay but what usually happens is this okay you have credit card a now which is basically empty and you have credit card B all right and what happens is basically you say well this one is free you start using it again okay and before you know it this goes right back up to 5,000 or 3,000 or 4,000 and this one you're barely making any real payments or any Dent to it remember they gave you 5,000 the balance transfer credit card is still a credit card you can still use it to buy stuff and it still gave you $2,000 extra dollars and you actually need it so now you might use that for some things else okay and before you know it the 21 months have gone by and now you owe over $110,000 overall you owe credit card a you also go owe credit card B credit card B is saying yep we got them now we're actually collecting interest payments every single month from you and credit card a is saying well he paid it off but now he's back to pay now so I guess we win also so what is the right way to go about this and Tommy how have you ever done this the answer is I owed about wait for it $133,000 in credit card debt and I actually used balance transfer credit cards to actually help me clear all the debt now I was not one of the people that actually went ahead and basically clear credit card a transfer to credit card B and then build up a balance back in credit card a what I did was this I follow this three step system okay the first step is you want to set for yourself some really real istic goals based on how long they're actually going to give you interest free so overall let's say I actually owe $5,000 right that's how much I actually owe I'm going to divide this number by how many months you're actually going to give me so divided by 21 in this in this case by the way what credit card am I actually talking about I'm actually talking about the city Simplicity balance transfer credit card that offer 21 months to pay interest free 0% APR and even 12 12 months to actually buy things and not get charged any interest obviously they're doing this for a reason you transfer the balance over you get 21 months to pay it off but you also get 12 months to buy other crap and actually build up even a bigger balance don't be stupid don't fall for that okay so now I know that per month I need to pay about $240 to be debt free in21 months okay that's the idea and that's how I would actually do it now for me personally I would say well if if this is actually very doable I would stick to it if it's actually a little bit less than I can basically do I would actually lower it and basically even if I end with the balance okay at least I was actually realistic okay now for me personally I actually paid more towards it to be able to pay it off a lot faster I actually paid off $133,000 in credit card debt in 12 months okay because I actually fell for that trap where discover sent me a credit card and they were like Hey we're going to give you I think 18 months of purchase free interest and I went crazy okay I went crazy and what happened is I maxed out everything then it was like um I think it was 18 months right so I spent like 6 months doing some crazy stuff and then I had 12 months and I was like yo I need to pay all this in 12 months and I basically was able to cover everything in 12 months I think at a point I to transfer balance over to the balance transer card but I was actually able to do it which actually saved me a ton of money but it was only because I was smart so step number two is basically once you transfer the balance well close credit card a all right close it because you don't want to be at risk at rebuilding this actual um credit line and to actually get into double the debt you actually want to clear that and then lastly all right the balance CH credit card don't use it to get into more debt only use it to actually pay off the debt fast and be done with it and once you're done with all the debt my advice would be a 100% just close to to credit cards overall and don't get back into those problems okay ever since I became debt free and I don't have any credit cards I have no method no way of getting into debt anymore so it's not something I worry about but as long as you have that possibility that availability to watch you say I'm going to use this credit card for this or that for this emergency or that emergency you're always going to be going back into debt and going right back into where you landed I think the Bible says a dog is always going to return to his vomit and that's just disgusting okay so if debt is actually getting you into trouble over and over again and you're going back to it well that's just stupid and nonsense okay you actually want to avoid that so yes okay understand what they're trying to do they're trying to get you to bring your balance over to hopefully spend more money to be trapped with them and to pay them a bunch of interest but if you're smart what you're actually going to do is say I'm going to use you and I'm going to take advantage fully I'm going to close credit card a and once I'm done with you I'm also going to close you and I'm going to be done with it so set for yourself achievable goals so you're actually able to do this as fast as possible guys thanks for watching as always like subscribe hit the Bell sh notified there are obviously other balance of credit cards out there so if you know a few of them comment them down below if you want a full video on the offers out there let me know and I'll actually get to work up here is another video and this video is actually made possible by the supporters over at patreon here is a list of their names I appreciate it a ton if you actually want to join us on patreon support the channel the link is going to be down below thanks for watching as always like subscribe hit the Bell so you get notified peace

As found on YouTube

so let's say for example you have right now a $5,000 credit card okay that's the balance on this card you're paying 25% interest annually and that's about a $100 minimum payment every single month you're actually responsible for paying now all of a sudden by Magic you actually get an offer in the mail from a balance transfer credit card and you're like yo it must have been my luck it's not luck it's marketing your information has been sold thus the company knows about it and thus now they're sending you offers Direct offers to you now the offer says this we're going to give you 21 months to transfer your debt over to us and you get to pay it off in 21 months and we won't charge you any interest whatsoever for those first 21 months and you might say well this sounds like a great deal over here I'm paying for example a 100 bucks per month in interest but over here I'm going to be paying Z in interest for the first 21 months this saves me a bunch of money and the only catch is you have to pay a 3% fee for the entire balance transfer now that's not a big deal because right now you're paying $100 as a minimum payment and when you take 3% of 5,000 that's only about $150 or so so it's really not a big deal so why is this attractive what is the problem with it and what exactly is a balance transfer credit card I'm going to go into all the details in this video now do me a favor guys and ask you smash the like button I appreciate it a ton now the first thing is this guys okay a balance transfer credit card I'm not going to complicated it's basically just a credit card that is designed to actually get people that are in debt in some way to transfer their debt over to this credit card and potentially that company be the one that's actually going to get all that interest from you going further it's kind of like a long-term investment okay they're actually betting that you're not going to to pay it off in that introductory period and the TR going to keep the balance and you're going to continue to pay them and pay them and pay them and yes it could actually turn against them if you actually pay but for the most part they get 3% outright and if you don't pay them well you might become a customer for something else you might get another credit card with them or another product or a loan or a mortgage whatever it is okay they have a customer a prospect to get other things that is what a balance transfer is actually good for it now what is the problem here Tommy I still don't understand okay they're giving me an offer if I'm smart and I take advantage of it I walk away without paying any interest isn't that great well the answer is this okay you might think that you're actually going to walk away dilly dally free okay but what happens is usually this what's actually going on when you actually open up a Balan transfer credit card whether it's an offer whether you've been pre-approve approval whatever you just basically you basically just opened up another line of credit that is what's actually going on so let's say for example you have credit card a you owe $5,000 a year and now you actually get pre-approved for a balance for a credit card and then you basically apply and then say hey we're actually going to give you a balance of or a credit line of $7,000 and you say well that's awesome that's more than I had over here so now you say I want to transfer the balance from credit CR card a over to credit card B your new card the balance transer card and by the way it doesn't have to be a credit card it could also be for example Hospital loans it could be any debt overall even Collections and they could actually just basically pay that off by sending them a check and basically now you're in here and the debt is over here that's the whole idea okay so what happens is this okay you say I want to transfer balance from this card over to here they say okay just pay us a 3% fee you pay the 3% fee that's $150 they sent over a check to your credit card okay now that's fully paid off the balance on credit card a is basically zero the balance on your new balance crit card is basically um $5,000 or whatever the balance here basically was that's the idea now what actually happened here okay you went from having a credit line of $5,000 to having a credit line of basically $122,000 remember so if you got in value so far I'm going to ask for a favor subscribe to the channel because only like 20% of the people that watch or actually subscrib so go ahead and subscribe right now cuz I have a lot more content and having a credit line of basically $112,000 remember they actually gave you $7,000 and you have 21 months to pay that off okay without any interest and you might think this is awesome okay what I'm going to do is basically pay this off and never look back but what usually happens is this and I'm sad to say this okay but what usually happens is this okay you have credit card a now which is basically empty and you have credit card B all right and what happens is basically you say well this one is free you start using it again okay and before you know it this goes right back up to 5,000 or 3,000 or 4,000 and this one you're barely making any real payments or any Dent to it remember they gave you 5,000 the balance transfer credit card is still a credit card you can still use it to buy stuff and it still gave you $2,000 extra dollars and you actually need it so now you might use that for some things else okay and before you know it the 21 months have gone by and now you owe over $110,000 overall you owe credit card a you also go owe credit card B credit card B is saying yep we got them now we're actually collecting interest payments every single month from you and credit card a is saying well he paid it off but now he's back to pay now so I guess we win also so what is the right way to go about this and Tommy how have you ever done this the answer is I owed about wait for it $133,000 in credit card debt and I actually used balance transfer credit cards to actually help me clear all the debt now I was not one of the people that actually went ahead and basically clear credit card a transfer to credit card B and then build up a balance back in credit card a what I did was this I follow this three step system okay the first step is you want to set for yourself some really real istic goals based on how long they're actually going to give you interest free so overall let's say I actually owe $5,000 right that's how much I actually owe I'm going to divide this number by how many months you're actually going to give me so divided by 21 in this in this case by the way what credit card am I actually talking about I'm actually talking about the city Simplicity balance transfer credit card that offer 21 months to pay interest free 0% APR and even 12 12 months to actually buy things and not get charged any interest obviously they're doing this for a reason you transfer the balance over you get 21 months to pay it off but you also get 12 months to buy other crap and actually build up even a bigger balance don't be stupid don't fall for that okay so now I know that per month I need to pay about $240 to be debt free in21 months okay that's the idea and that's how I would actually do it now for me personally I would say well if if this is actually very doable I would stick to it if it's actually a little bit less than I can basically do I would actually lower it and basically even if I end with the balance okay at least I was actually realistic okay now for me personally I actually paid more towards it to be able to pay it off a lot faster I actually paid off $133,000 in credit card debt in 12 months okay because I actually fell for that trap where discover sent me a credit card and they were like Hey we're going to give you I think 18 months of purchase free interest and I went crazy okay I went crazy and what happened is I maxed out everything then it was like um I think it was 18 months right so I spent like 6 months doing some crazy stuff and then I had 12 months and I was like yo I need to pay all this in 12 months and I basically was able to cover everything in 12 months I think at a point I to transfer balance over to the balance transer card but I was actually able to do it which actually saved me a ton of money but it was only because I was smart so step number two is basically once you transfer the balance well close credit card a all right close it because you don't want to be at risk at rebuilding this actual um credit line and to actually get into double the debt you actually want to clear that and then lastly all right the balance CH credit card don't use it to get into more debt only use it to actually pay off the debt fast and be done with it and once you're done with all the debt my advice would be a 100% just close to to credit cards overall and don't get back into those problems okay ever since I became debt free and I don't have any credit cards I have no method no way of getting into debt anymore so it's not something I worry about but as long as you have that possibility that availability to watch you say I'm going to use this credit card for this or that for this emergency or that emergency you're always going to be going back into debt and going right back into where you landed I think the Bible says a dog is always going to return to his vomit and that's just disgusting okay so if debt is actually getting you into trouble over and over again and you're going back to it well that's just stupid and nonsense okay you actually want to avoid that so yes okay understand what they're trying to do they're trying to get you to bring your balance over to hopefully spend more money to be trapped with them and to pay them a bunch of interest but if you're smart what you're actually going to do is say I'm going to use you and I'm going to take advantage fully I'm going to close credit card a and once I'm done with you I'm also going to close you and I'm going to be done with it so set for yourself achievable goals so you're actually able to do this as fast as possible guys thanks for watching as always like subscribe hit the Bell sh notified there are obviously other balance of credit cards out there so if you know a few of them comment them down below if you want a full video on the offers out there let me know and I'll actually get to work up here is another video and this video is actually made possible by the supporters over at patreon here is a list of their names I appreciate it a ton if you actually want to join us on patreon support the channel the link is going to be down below thanks for watching as always like subscribe hit the Bell so you get notified peace

As found on YouTube

Hello. My name is John Ulzheimer and I am a credit expert who contributes to
the Credit Card Insider blog. Today's question is this: If I have
a zero-interest credit card and I do not pay the balance in full each month,
will it hurt my credit score? Excellent question. Zero-interest credit
cards are very popular these days They are a great way to transfer a
balance from an interest accruing credit card
account to a zero-interest credit card account which will generally buy you some time so that you can
aggressively attack the balance and try to pay off your credit card
debt.

Now, credit card debt tends to be the most expensive debt that we
carry. The average interest rate on a credit
card is somewhere around fifteen percent can be as high as almost 30 percent. So
zero-interest cards are generally a pretty good deal. And the
grace period, meaning the period of time where you're paying zero interest, generally ranges somewhere between 6
and 12 months. That's the good news. The bad news is
this: the answer to the question is yes. You can hurt your credit scores if you do not pay that balance off in full each month,
and here's why. There is a measurement in all credit-scoring
systems, whether it be FICO or Vantage Score, that measures the balance on
your credit cards relative to the credit limits on your
credit cards. So, hypothetically, if you open a zero
interest credit card that has a ten thousand dollar credit limit, and you transfer balances in from other
credit cards, and say you transfer in five thousand
dollars, seventy five hundred dollars, let's say you
transfer in a full ten thousand dollars.

Then what you have just done is you've just
placed a heavily leveraged credit card on your
credit reports, and the ratio's going to vary depending on what the balance is
relative to the limit. So if you transferred five thousand dollars on to a ten
thousand dollar card, you're going to be fifty percent utilized. If you transferred seventy five hundred
dollars you're going to be 75 percent utilized. If you transferred ten thousand dollars then
you're going to be 100 percent utilized. That ratio, that
utilization percentage, is very important in your credit score.
The higher that percentage, generally speaking, the fewer points you're
going to earn in debt-related categories of credit
scoring systems, therefore the lower your credit score is
going to be.

So by simply leaving the balance stagnant,
and unpaid, Then you risk causing damage your
credit score that's going to persist for however long it takes you to
start paying that balance down. Now, even if you are making a payment
every single month, but it's a modest payment, either 50 bucks, a hundred bucks, then
it's very unlikely that you're going to be paying it down
enough to cause a positive change in that utilization percentage and
actually increase your score.

So, it's in your best interest to attack
the balance as quickly as possible not only because of your credit score,
but also because the grace period of the zero-interest is going to eventually expire, and if you don't have it paid off in full
by the expiration of the grace period, there's a chance that you
may have to pay interest retroactive all the way back to the day that you
opened the card and started transferring balances onto the card.
So while zero-interest cards are a great way to buy yourself some
time so that you can get out of expensive
credit card debt, the do you have some dangers and there
are some risks with using them if you don't use them properly and try to get out of
that debt as quickly as possible. To learn more about this topic or
anything else having to do with credit cards, please visit the Credit Card Insider blog
at CreditCardInsider.com. Thanks for your time, have a
great day.

As found on YouTube

Hi. My name is John Ulzheimer, and I'm a
credit expert who contributes to CreditCardInsider.com. If you have any questions for us then please submit them in the comments section below. Today's question comes from YouTube user Adriana "Adri" Vargas. Her question is this… What is a intro APR? She would also like me to talk about the
difference between an intro APR and a regular APR. And then purchases made under both the regular or the intro APR.

So first off, the APR is the annual percentage rate. So in other words it's the
interest rate you're gonna pay if you do choose to carry a balance on your card from 1 month to the next. If you pay your balance in full every single month and you never carry a balance forward, you don't need to worry
about the APR, because you're not paying interest, so there's nothing to apply interest rate
to. Most credit card issuers today issue rewards style credit cards. And one of those types
of rewards cards is the 0% interest APR card.

And most credit card issuers are marketing those to consumers who have debt on other cards. And their marketing them as balance transfer options. So if you have a balance on one of your cards, you may get offers from another card issuer saying, "Hey! Transfer that balance from that other card to our card, we'll give you an intro APR of 0% for 12 months, 18 months, whatever, and you'll also get 0% APR on new purchases. So essentially it is a bonus annual percentage rate, of some very low, in many cases, 0% structure, which is an
incentive for you to do business with them. Now, the reason this is called an intro or an introductory APR, is because it's not going to last forever.
Obviously a credit card issuer is in business to make money.

And one of the ways they make money is
by charging you interest on the debt that you carry from month to month. So they have to eventually change your APR from the intro APR of 0% to something greater than 0%. And that APR is what's commonly referred to, and in Adriana's question, is what's referred to as kind of a regular or persistent interest rate. That
interest rate is obviously going to be set based on the credit
quality of the applicant. But generally speaking, it's going to fall in the 15 to 16% range, although that can vary greatly in either
direction. But generally speaking, 15% is a good target or expectation. If you make
purchases under the intro APR, meaning that you make a purchase at 0%
APR, the APR on that particular purchase cannot go up, unless you do something like start missing payments. If you start missing payments, then the credit card issuer can asign a higher interest rate retroactive,
meaning that they can retroactively change the interest rate on
purchases that you've already made. But generally speaking if you continue to make your payments on
time, then all the purchases you made on under the intro APR will be priced out at the intro APR.

And remember, this is only relevant to
the point where you actually use the card long enough that the APR
actually expires. The regular APR, let's just say
hypothetically that that's 15%, any purchases made when that particular
APR adjusts to the new regular interest rate, any purchases made
under that, at that period of time will be priced out under those particular terms. So it's something to keep in mind, because
you may start getting credit card statements after you've had the account for awhile, that actually have variable purchases under variable interest rates. One is the intro.

One under the regular APR. Another thing to keep in mind is, there may be language in your cardholder
agreement that allows the credit card issuer to
charge you interest retroactive to the day that you
opened the card if you have not paid off the balance
transfer in full. This is going to be very expensive if
this is applicable to your card and you don't take care of it. So let's say you get an intro APR at 0% for 12 months, and you transfer $10,000 to that card.

And then for 12 months, you have no interest on that $10,000. If you don't pay that $10,000 off by the time 12 months expires, and your grace period of 0% APR expires, they're gonna hit you with interest all the way back to the first day that you opened your account, on the entire amount. So be very careful when you're using these types of cards. The expectation is that right now there's no interest. But going forward, there absolutely can be.

So you're going to want to work very diligently to payoff that card as quickly as possible, before the intro APR expires. If you have
any other questions pertaining to credit or financial topics, then please submit them to CreditCardInsider.com or in the comments section below.
Have a nice day!.