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The following is a post from Grayson from Debt Roundup. Check out his blog after reading how he paid off $52,000 in credit card debt. Nice work, Grayson!
When you grab the shovel and start digging your way out of $50,000 worth of credit card debt, you will do anything that you see fit in order to minimize the process. As I stared at all of those greedy, plastic cards with my name on them, I decided I would use the cards to my advantage.
Yes, I did use credit to run my way through college and to start an online e-commerce business, but why not try to use them to help me? This is when I decided to lace up my shoes and play the credit card balance transfer game.
How Do Credit Card Balance Transfers Work?
For those of you that don’t know what the balance transfer game is, then here is a quick and dirty breakdown. You take a credit card that has a balance with a high interest rate and transfer it to a lower interest credit card. This saves you a lot of money in the long run if done correctly. It is a pretty easy game to play and here are the rules.
- List all of your credit cards and interest rates in order of highest to lowest APR.
- List your available credit on each card.
- Ask your credit card provider for a balance transfer promotion.
- If nothing available, then open up a new balance transfer credit card.
- Transfer your highest APR credit card balance onto your balance transfer card.
- Pay off your balance transfer card before the promotion period ends.
What Do I Need To Do To Lower My Interest?
These rules are not really complicated and can be pretty easy to get a handle of. When I played this game, I had a credit card that had a good amount of credit available. I hadn’t seen any balance transfer promotions, so I called the credit card company.
After a few minutes over the phone, I was able to score an 18 month 2.99% promotion. While some of you might think that 2.99% is not that great, I had an average APR of 14%, so this was a big win. I took my highest APR balance and transferred it over while on the phone with the rep.
What About Balance Transfer Fees?
The key to playing and winning the balance transfer game is to make sure that you are not paying a balance transfer fee. This is a very common fee that credit card providers charge to “process” a balance transfer. Many do a set fee or a certain percentage of your balance transfer amount.
I was able to get this fee waived due to the amount I was transferring, but the rep on the phone had to get the manager’s approval.
Make Sure You Don’t Make This Mistake
If you can’t get this fee waived, then make sure you calculate how much you will save by transferring the balance. Another aspect is making sure that you will be able to pay off the full balance by the time the promotion ends. If you don’t, then most balance transfers will retroactively charge you interest on the full balance that you transferred. It will negate the whole process.
Related: Ultimate Guide To Paying Off Credit Card Debt
There are some out there that think balance transfers are not good, but I think they are a useful tool. If you have had as much debt as I, then you will use any tool that is available in your toolbox.
How Many Times Did I Transfer My Balance?
During my four years of paying down credit card debt, I played the balance transfer game 5 times. I would transfer a balance, pay it off, then transfer another balance. I found that when you pay off a credit card, many providers will entice you to come back and spend money. I didn’t want to spend more money, but I did want to use their balance transfer promotions to help me get out of debt.
If you are in debt and need some help paying off your credit cards, then why not try the balance transfer game? It might not decrease the amount of time it takes to pay off your debt, but it will decrease the amount of interest that you pay. Any little bit helps, right?
I played the balance transfer game 5 times and won it each and every time. Those “wins” helped me get through my financial turmoil and right my ship.
Need credit card relief? Check out out the latest balance transfer credit cards and see if you can “WIN” the game too!
Author Bio: Grayson is the owner of Debt Roundup, a personal finance blog dedicated to helping everyone get out of debt. Grayson dug himself out of $50,000 worth of credit card debt and has started to gain positive net worth. Check him out at Debt Roundup.
27 thoughts on “I Played the Balance Transfer Game and Won”
I have been playing this game for a while and slowly winning. I am not able to pay off the zero percent card before the promotion period ends but I do knock a lot of debt off the card while saving over $1k in interest charges including the transfer fee. Once the period is about to end I find another promotion and transfer that balance and try to combine whatever else I can up to the limit to save more interest.
That is how you play the game Alan. It would be more beneficial to only transfer what you can pay off onto the 0%. Make sure you read the terms because some transfers will charge you full interest on the amount you transferred, not the amount you have left.
This sounds extremely risky but the fact that he accomplished it is awesome. I only have 1 credit card and I got it when I was 18 and about once a month the bank asks me if I want to raise my credit limit from that introductory $500 and I have been telling them no for years now. I don’t want $50,000 in credit debt!
My credit card debt was from building a business. I made some dumb choices, so I had to make the decision to fix them. Using balance transfers can be risky, but if you don’t take risks in life, you might not be rewarded. I was rewarded with a shorter payoff time and thousands of dollars saved in interest.
Bravo Greyson for using the tools at your disposal. I think for some people balance transfers end up getting used to make more credit available for more spending, but sounds like this one was used to get out of debt ASAP. Nicely done.
Thank you Mrs. Pop. There are many that would use them to create more debt, but they are great at reducing debt as well. You just have to know how to use the tools. It is a simple game that anyone can play and win.
Man, getting out of $50,000 in credit card debt without settling any of the balances is pretty impressive. In 2010 I paid off about $75,000 in total debt, but a relatively small percentage was on credit cards.
It’s funny you mention ‘grabbing a shovel’ when it comes to getting out of debt. When I was paying off my debt, I was only able to do it quickly because I was scrambling to grow my shovel and throw every available penny at the debt.
Hopefully as everyone is playing the balance transfer game (and winning) they’re also accelerating things as much as possible by earning side money and clobbering debt with it.
Yes, YNAB! Sorry to interrupt, and I’m sure Grayson will have something to say, but YNAB is awesome! I’ve never used it, but the videos are sweet 😉
Well, when you finance a business on credit cards (many of them) you have a lot of chances to play the balance transfer game. I got pretty good at it, so that is why I won. The only way to pay down debt is to earn more money. You can only reduce expenses by so much, but I had to think outside the box to earn more money.
Sounds like a game I never want to play lol. I’ve heard of it before and it makes sense if you can keep up. So basically if they want your business transferring the money they may waive the fee. That makes sense.
I only played the game because I had to Mr. CBB! I didn’t want to use any companies because I wanted to be responsible for it, since I caused it. The game is not bad, but it works very well if you have discipline. I didn’t take on any new debt in order to play this game, but I think that is good advice no matter how you pay down debt.
I have heard of balance transfer tactics in order to pay their credit card debts but I haven’t tried this myself.
It works pretty well, but you have to read the fine print in order for it to work for you.
I have certainly played the game when we were paying off our credit cards. It saved us tons in interest, but I won’t say it’s fun and I hope to never play again. Thanks for sharing.
There is nothing really fun about credit card debt, but if you get to save money on interest by putting the credit card companies against each other, then why not?
That is awesome that you got to use them to your advantage and didn’t end up with a bunch of fees! You do have to be very careful but you are an example of showing how it can be done!
Yes, you can’t just use up every balance transfer form that comes in the mail. Many of them have fees, but if you call them up, many will waive them in order to get your money.
When we first started dating, Greg had some credit card debt that we transferred to a 0 percent card. It didn’t take long to pay it off after that!
It makes you feel better when you are paying 0% interest. Only paying principle goes a long way when you are trying to kill debt.
I love this approach and your analysis, Grayson. Balance transfers are only bad if you run up both credit cards later. I totally agree: use every tool in your toolbox to wring every last dollar of savings out of your strategy.
The one thing I didn’t talk about was using my saved interest and putting it in my savings account. I did this because I wanted to have some savings when I was done paying my credit cards.
Good job playing the game, great move calling-up the bank and talking your way out of the balance transfer fees!
Sometimes it is just that simple. One call can save you 3%!
Great tips, Grayson! As you know, we are just starting this. We’re eager to use the tips mentioned above and win quicker this way too – thanks for sharing!
Good luck to you Laurie. Many are scared of this approach, but I embrace it. Simple way to save money.
I’ve done the transfer game before and it’s always worked out well for me! I love the 18 month zero interest offers!
Glad that it worked out for you Jose. Those offers are very nice.