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

Important points

• Dave Ramsey says balance transfer cards aren’t worth it at all.
• But balance transfer cards can save you money on credit card interest.

Balance transfer credit cards are a common tool to help with debt settlement. Many people who have credit card debt use a balance transfer to lower their interest costs. The process involves acquiring a new credit card with a 0% interest rate on the transferred balance and transferring debt from existing credit cards to it.

Because credit cards tend to have very high interest rates, transferring the balance to a card that charges 0% can significantly reduce financing costs and reduce the cost of paying off debt. And that’s true, although balance transfer cards usually charge a small fee, e.g. B. 3% to transfer the credit.

But while some financial experts recommend using balance transfer cards to aid in the debt-payoff process, others oppose it. Financial guru Dave Ramsey, in particular, has argued that it’s not worth taking advantage of offers to transfer balances. Here’s why.

This is what Dave Ramsey says about balance transfer cards

Ramsey has made his position on money transfer credit cards very clear. He said they are “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, in fact, you’re going to be paying the bills longer.

And he warns that the introductory rate will only last for a short time before you end up stuck with a floating rate that could cost you a fortune.

Ramsey also warns that card issuers are out to make money from balance transfer cards, and you could face initial transfer fees, penalties for missed payments, and a high post-promotion interest rate.

Is Ramsey right?

Ramsey is right about some aspects of balance transfer cards. You’ll end up with higher interest rates if you don’t pay off the debt before the initial 0% interest rate expires, and you’ll have to pay both an upfront fee and additional costs if you default on payments.

But none of these are good reasons not to accept an offer to transfer the balance.

The credit card you currently owe money on probably will Also have a variable interest rate and is beautiful Charge you high interest rates. If you can get that rate all the way down to 0% for a full year to 15 months, which is the duration of most promotional rates, you will definitely make paying off debt cheaper. And paying a small fee of 3% to 5% for the opportunity to drop your interest rate to 0% is usually worth it, since it’ll cost you a lot less than the 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 be effective with your card balance is to devise a plan to pay it off in full as soon as possible .

But if you’re serious about getting debt free and making additional payments on your loans while living on a limited budget and avoiding borrowing more, there’s absolutely no reason not to take advantage of a card offer that gives you the opportunity to get more of each payment go to the main balance so you can get out of debt faster and cheaper.