7 balance transfer credit card mistakes and how to avoid them

Inflation is up, interest rates are high and Americans' budgets are getting tighter. The balance transfer offers on credit cards can look like an attractive option for those carrying balances on their cards. On the latest episode of PennyWise, host Nat Cardona is joined by Melissa Lambarena, credit card expert at NerdWallet, shares tips on how to avoid common pitfalls with credit card balance transfers.

Read more on NerdWallet here!

About this program

Nat Cardona is host of PennyWise as well as Lee Enterprise's true-crime podcast Late Edition: Crime Beat Chronicles. Lee Enterprises produces many national, regional and sports podcasts. Learn more here.

Episode transcript

Note: The following transcript was created by Adobe Premiere and may contain misspellings and other inaccuracies as it was generated automatically:

Welcome to PennyWise, a Lee Enterprises podcast. I'm your host Nat Cardona. Times are tough for many American households right now. High interest rates, inflation, tight budgets, debt piling up. For all of these reasons. Balance transfer credit cards may be a helpful option for zapping that debt, but they aren't a cure all. Nerdwallet Credit Card Team senior writer Melissa Lambarena is here with us with some ways to avoid balance transfer credit card mistakes.

Everyone knows that we've got high inflation, high interest rates. People are really hitting up their credit cards because times are tough for a lot of households. And something appealing may be moving your high interest from one credit card to another that has maybe zero APR. You can run into some trouble with some of these things, though. So we want to kind of go over some of the mistakes to avoid.

The first being, this one that I see right here is trying to transfer a balance between cards with the same issuer. Let's just go into that. That's something you probably want to avoid. Yes. You actually even transfer a balance with the same credit card issuer. So this is when it might make sense to open a balance transfer credit card with the new issuer.

Sometimes if you have a different credit card with another issuer, they might send you offers via email or in your email inbox. And this might be helpful in letting you use an existing line of credit to take advantage of a 0% balance transfer offer. Okay, that makes sense. And sometimes you might be missing the balance transfer deadline. Let's get into that.

That might be something that people aren't aware of. When you're trying to transfer a balance, you typically have somewhere between 30 and 120 days to complete that transfer. So if that's your main goal, you want to make sure to act quickly so that you can take advantage of all of the benefits and make sure that you still qualify and are able to complete that transfer.

Sure. And just like anything else, there are hidden fees left and right, and you could miss the fact that you're not taking into account that there is a balance transfer fee, right? Yes. The balance transfer fee is one thing that people sometimes fail to consider and it can be a little bit tricky. You have to compare that costs with the amount of interest that you're already paying and projected to pay over time.

So you want to factor in the transfer fee that might be 3% or 5% of the total amount transferred. And compare if it's going to save you money compared to the amount of interest you'll pay over several months. And Nerdwallet has a calculator that can help you weigh these costs. Okay. Thank you for bringing that up, because that's very important, because a lot of this stuff can be overwhelming for sure.

This is one that I have heard of people encountering in the past, overestimating how much debt that can be transferred. Let's get into that. Yes, a balance transfer limits is very different from your cards credit limit. It's significantly lower where you can only transfer as much as that balance transfer limit permits. So you want to be mindful of that.

This means that you might not get to transfer all of the debt that you were hoping to do, do so, and you might have to come up with another plan, a different plan for that balance that might be leftover that you couldn't transfer. Sure. And when you're planning things out and planning out your finances and budgeting, just kind of with any credit card or any bill you have, you need to and probably want to make more than the minimum payment, especially when it comes to those balance transfers.

Right. Thinking m