Mark Henry of Alloy Wealth on the Value of Credit Card Balance Transfers

Mark Henry of Alloy Wealth has made it his personal mission to help everyday Americans save for a financially sustainable retirement. By creating customized written retirement plans that take into account personal finances, savings, investments, budgets, and lifestyle goals, Mark Henry and his team at Alloy Wealth help clients “live large” in retirement.

In addition to his work with clients of Alloy Wealth, Mr. Henry shares his decades’ worth of knowledge and experience across a wide range of platforms. He is a widely sought-out public speaker (both in person and online) who has appeared on radio shows, podcasts, television, and his YouTube channel. He also maintains the Living Large Retirement Blog to help people trying to navigate the complexities of retirement planning.

The blog has articles with valuable tips and advice for just about anyone—whether you’re a retiree, a worker nearing retirement, or you’re just starting your career and looking to save wisely from the beginning.

A Good Time for Balance Transfers

A recent article on the Living Large Retirement blog highlights the benefits of making some strategic credit transfers. Paying down credit card debt is one of the most important steps you can take toward financial independence, yet people often struggle to do so due to unhealthy spending and saving habits as well as high interest rates.

Fortunately, if you have good credit, there are several credit cards available that have an introductory 0% annual percentage rate (APR). Nerdwallet, for example, lists some of the best of these cards, which include the Chase Freedom Unlimited, Blue Cash Everyday Card from American Express, Discover It Cash Back Card, Wells Fargo Reflect Card, Chase Freedom Flex Card, and Bank of America Customized Cash Rewards Visa Card. Check sites like Bankrate and Nerdwallet often; rates and terms change, so any “best credit cards” list will also change.

Transfer your existing balances from cards with high interest rates to these or other cards with 0% introductory APRs. With this temporary relief from high rates, you can pay down more of your principal balance—which is exactly what you need to do to get out of debt.

Introductory 0% Rates Are Temporary

Of course, there are some important cautions related to this strategy. Transferring a balance to a card with a temporary 0% APR only works as a long-term solution if you can change the spending habits that got you into debt. Credit cards can be financially crippling when they are used incorrectly, as they can lead you to spend money you don’t have—and then charge you sky-high interest rates that make it difficult to dig out of debt. Even when you transfer your balance to a card with a 0% APR, if you don’t change your spending habits, you’re likely to stay in debt, and possibly even fall further behind.

It’s also important to remember that a 0% APR is temporary. Many of these cards only provide 12 to 15 months of 0% APR; some cards may offer just six months at this rate. After this period, the APR will typically increase to anywhere from 17%-29%. That means it’s critical to pay the principal down aggressively during the introductory period. Avoid unnecessary spending and put all the money you save on interest toward paying off the principal. In addition, some cards have a 3% balance transfer fee. If you don’t pay off the balance within the allotted time (before the normal APR kicks in), it may actually cost more to transfer your balance to the new card than if you had simply kept the balance on your old card.

Ultimately, anytime you transfer your balance to a card with a 0% introductory APR, you should use it to rapidly pay down that balance. Shift around your budget and make it happen. Don’t treat these cards as a temporary pause or an excuse to put off repayment until a later date.