There are millions of Americans who are dealing with credit card debt. While some of these individuals and families may just focus on paying the minimum monthly payment, there are many who are doing their best to address this debt issue and find healthy financial solutions. For some, part of the solution might be to transfer the balance of one credit card with a high interest rate to another credit card with a lower interest rate. This is known as a “balance transfer.”
But, are balance transfers a good way to address credit card debt? Well, a recent article noted that while, in general, balance transfers can be a useful way to pay down credit card debt, there are some important factors to consider. Most importantly, if your plan involves opening up a new credit card, that will result in what is known as a “hard inquiry” on your credit, which will reduce your credit score by a few points in the short term.
However, by transferring a credit card balance to a card with a lower interest rate, New York residents will not only be able to pay down debt faster, they will also save themselves hundreds, if not thousands, of dollars in interest payments.
Unfortunately, for New York residents who are facing overwhelming debt burdens, simply transferring a credit card balance to another card won’t be an overall solution. For some, filing for bankruptcy may be a more realistic option for achieving debt relief. Doing so can result in a full discharge of many different kinds of debt.
Source: The Motley Fool, “Does a Credit Card Balance Transfer Hurt Your Credit Score?,” Nathan Hamilton, June 7, 2017