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When you’re facing a mountain of credit card debt, a zero percent balance transfer is really appealing. But it’s not always the best option.

There are some financial coaches and experts out there who believe if you have credit card debt, that you should never transfer it. At Fiscal Fitness, we believe everyone’s situation is different and people respond differently to motivators and options depending on their personality and financial situation. It’s our job to help you figure out which strategies – like balance transfers – work for you and which ones will not.

When You Should Take Advantage of a Balance Transfer

Using Interest as a Motivator

Ultimately we want you to be motivated to pay off your debt as quickly as possible. When you are paying interest, that can motivate you to keep paying off as much as you can toward your credit card debt.

The pain of wasting money on interest can light a fire under people and that fire is what keeps you motivated. When you move to zero percent interest, it removes the motivation, meaning it could take you even longer to get out of debt.

Don’t Be Sucked into Lower Payments

Often times, when you move to a zero percent interest card, your minimum monthly payment goes down. Where you may have once been paying $100, maybe you now only need to pay $60. That is a pro, but only if you don’t take advantage of these savings.

If you lower your payment to the minimum amount, it might actually take you longer to get out of debt. Paying less equals a longer payoff timeline. So if you do go with a balance transfer, don’t lower your payment. Keep it the same and have more going to the principal every month.

Our Recommendation

Think about the pros and cons:

• Will you stay motivated if your interest goes away?
• If your payment amount goes down, will you still pay the same amount and put more toward the principal?

We recommend if you do take advantage of a zero percent balance transfer that you put fail-safes in place. Write out and commit to continuing to pay on schedule for the exact same amount every month. Put red flags in place should you not stick to this plan. When there is a red flag, address it and get back on track immediately.

What We Tell Our Clients

When we’re working with individuals or couples to tackle credit card debt and set a budget, we don’t recommend balance transfers as a strategy right away. We only recommend this after a couple of months of working with our clients. We want to see them demonstrate that they are meeting their goals and sticking to budgets. This is a strategy they need to earn and prove they can handle.

We believe there is not a right or wrong way to do things. There is a right or wrong way for each of us.

Tell us in the comments about what debt payoff strategies work best for you. Do you need interest as a motivator? Have you successfully paid off debt using a zero percent interest balance transfer? Let us know.

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And if you’re not sure, we’re here to help you figure out your best strategy. Schedule a Power Planning Session if you want one-on-one coaching help getting out of debt, sticking to a budget, and creating a plan for your money.  Or follow the Fiscal Fitness Facebook page for more money motivation, tips and tricks.