Is Dave Ramsey Right About Balance Transfer Credit Cards?

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Following Dave Ramsey’s advice on balance transfer cards could cost you dearly.


Key points

  • Dave Ramsey Says Balance Transfer Cards Are Absolutely Not Worth It.
  • But balance transfer cards can save you money on credit card interest.

Balance transfer credit cards are a commonly used tool to help with debt repayment. Many people who have credit card debt use a balance transfer to lower their interest charges. The process involves getting a new credit card that offers 0% interest on transferred balances, then transferring debt from the existing credit cards to it.

Since credit cards tend to have very high interest rates, transferring the balance to a 0% card can significantly reduce finance charges and the cost of paying down debt. And that’s true even though balance transfer cards usually charge a small fee, such as 3%, to transfer the balance.

But while some financial experts advise using balance transfer cards to help with the debt repayment process, others are not in favor. Specifically, finance guru Dave Ramsey has argued that balance transfer offers aren’t worth taking advantage of. Here’s why.

Here’s what Dave Ramsey has to say about balance transfer cards

Ramsey has made his position on balance transfer credit cards clear. He said they were “absolutely not” worth it because “transferring debt from one credit card to another is not going to solve the debt problem.”

Instead, Ramsey says balance transfers create a “false sense of security” by making you feel like you’re solving your debt problem when you’re going to end up paying the bills for even longer.

And he warns that the introductory rate will only be in effect for a short time before you end up with a floating interest rate that could cost you a fortune.

Ramsey also warns that card issuers are there to make money from balance transfer cards and you could be hit with upfront transfer fees, missed payment penalty fees, and an interest rate. high post-promotional.

Is Ramsey right?

Ramsey is right about some aspects of balance transfer cards. You’ll end up facing higher interest rates if you don’t pay off the debt before the initial 0% rate ends, and you’ll have to pay both upfront fees and additional fees if you’re late. your payments.

But none of these reasons is a good reason not to accept a balance transfer offer.

The credit card you currently owe money on will likely be too have a variable interest rate and are already charging you interest at a high rate. If you can reduce this rate to 0% for a full year to 15 months, which is the duration of most promotional rates, you will certainly reduce the debt repayment. And paying a small commission of 3% to 5% to be able to lower your rate to 0% is usually worth it, as it will cost you much less than interest over the course of the year.

Ramsey’s best argument against balance transfers is that they can make you feel like you’re doing something about your debt when ultimately the only way to effectively manage your card balance is to make a plan to pay it back in full as soon as possible.

But if you really want to be debt free and are making extra loan payments while staying within your budget and avoiding borrowing more, there’s absolutely no reason not to take advantage of a loan offer. card that gives you the opportunity to get more from every payment. to access the principal balance in order to free you from your debts more quickly and at a lower cost.

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