Money Girl

Dealing with Debt: Expert Tips for Using a Balance Transfer Credit Card

Episode Summary

Ever wonder if using a balance transfer credit card could help you get out of debt faster?

Episode Notes

Ever wonder if using a balance transfer credit card could help you get out of debt faster? Laura interviews Mary Gameng, MBA and Credit Card Specialist with Citizens, and answers a listener question. 

Here are a few topics Mary and Laura talk about on this week's show:

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Episode Transcription

Hello, friends, and thanks for joining me this week! My name is Laura Adams, and I’m a personal finance expert and author who’s been hosting the Money Girl Podcast since 2008. If you’re building a business or want to earn more income, I hope you’ll grab a copy of my recent book, Money-Smart Solopreneur–A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers. It was a No. 1 Amazon New Release and is available everywhere books are sold as a paperback, ebook, or audiobook!

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My mission for Money Girl is to help you get the knowledge and motivation to prioritize your finances, build wealth, and have more security and less stress.

Today’s show was inspired by a question from Kelly M., who says, “I’ve received several offers for 0% balance transfer credit cards, but I’m not sure exactly how they work. Can you explain whether I should transfer my debt from a card charging 18.99% interest?”

Thanks for your great question, Kelly! I’ve done several podcasts on balance transfer cards, which can be a fantastic debt-management tool when used responsibly. To dive a little deeper into the topic, don’t miss podcast number 486, The Ultimate Guide to Using a Balance Transfer Credit Card, and number 653, Should You Transfer Balances to No-Interest Credit Cards Multiple Times?.

To chat about best practices for using balance transfers, I interviewed Mary Gameng, MBA and Credit Card Specialist for Citizens. Mary and I had a great conversation about credit card debt and how to use a balance transfer to your advantage. Then I’ll circle back to Kelly’s question at the end of the show.

Here are a few topics Mary and I talk about on this week's show:

OK, here’s my interview with Mary.

Mary, I am so excited to have you on the money girl podcast. Thank you for joining me.


Thank you for having me.


Mary, this is an interesting time for a lot of people who are struggling with credit card debt. You know, I think it's a situation that a lot of people don’t like to face, they don’t want to think about credit card debt.

But I really want to get your expert advice, you know, as a credit card specialist, tell me a little bit about what’s going on in the landscape of credit cards right now, how many Americans have it and what’s a typical amount?


That’s a great question, Laura. So, we’ve seen from our research that from that due the pandemic, there was actually a decrease in credit card debt in 2020. But as things are opening up, people are getting back out there. We’re seeing that on the rise again. So about 54% of US adults carry credit card debt, and the average balance per household is about $5,525. But that can also range upwards to about $8,700. So, anyone out there struggling is not alone.


Yes, I think those numbers should help people feel a little bit better about debt, and you know, doesn’t mean that it’s OK to keep it. It still means you need to be proactive to try to get it paid down or even eliminated if at all possible.

And this is a really important time to think about debt because as interest rates are rising, that  also is going to affect credit card rates. I don’t know if a lot of people understand that credit card interest rates are variable so they’re going to move as interest rates move and that means carrying credit card debt is going to become more expensive if interest rates continue to rise.

This is the perfect time to really get serious, you know, create a plan for paying off debt. So, what should a credit card holder or borrower do if they are struggling right now to pay off debt? How should they even think about approaching this and creating a plan?


Figuring out what your strategy is for yourself really starts with sitting down and getting a full picture of what your debts are. So, I would suggest that the first thing that anyone should do who’s struggling with debt is to make a list of all their debts.

So, write down the name of your accounts, your remaining balance, and interest rates, the minimum payment, and when that payment is due. I really think of this as like a five-step approach to how to figure out your credit card debt payoff strategy.

So, the second step would be calculating your max repayment. And basically, that just means look at how much you have left in your budget that you could use to pay off any debt that you have. So, take your income, subtract your monthly expenses, which could be your mortgage, rent, utilities, groceries, and then also subtract all your minimum payments that you saw in that step one, and then you’ll know that the remainder is what you can use to pay towards your high interest debt.


Okay, that’s awesome. So, list out everything, then figure out what’s the maximum amount that you can pay each month. I like that, keep going, what should we do next?


Yeah, absolutely. So go back to that list that you created in step one, and then look at it and prioritize your accounts by how much interest that you’re paying on it. So, we want to highlight those high interest accounts.


Yes, Mary, I always encourage folks to tackle the highest interest rate debts first. That way, you know, as you’re paying them off, you’re  saving the most money. Alright, so we’re up to step three, talk to me about four and five.


So yeah, let’s take a look at step four. And that’s really looking at how can you consolidate your

payments, and there are a few options there.

 So, I’m actually going to start with one option, a balance transfer card. So, this can help you consolidate all that debt that you saw in step one into one payment and make your life easier, because all you have to do is keep track of one bill per month, and one interest rate. And the beauty of that is that some cards actually have a low introductory APR offer from when you sign up. 

So for example, our Citizens Clear Value MasterCard, has an intro APR offer on balance transfers for 18 billing cycles. So that means that you can have a low intro APR while

also paying off your debt.


Okay, that makes a lot of sense. And I have taken advantage of balance transfer offers before, and I do think it’s really wise. I mean, it doesn’t make your debt disappear. But it definitely makes it a lot less expensive for, you know, a nice period of time. Eighteen months is a great amount of time for you to get those savings. And the savings can help you pay off your debt faster.


And one thing I mention to people, when they think about a balance transfer credit card, is also taking a look at those, you know, the set period for that intro offer, like you just mentioned. Eighteen months is a great amount of time but making sure that you can keep up with payments within that time and possibly even paying off your debt within that time can save people a lot of money.


Yes, absolutely. You mentioned another consolidation method.


Absolutely. So, another option is actually a home equity line of credit. So, you have to keep in mind, though, with a home equity line of credit that it uses your home as collateral. So, when you take a look at your options, just make sure that you’re confident that you can pay, keep up with that repayment plan before opening a home equity line of credit.


Yes, for our homeowners out there, you may have seen a nice increase in equity lately, as prices have gone up across the US. And so, if you do have a loan to value ratio that you know isn’t too high, you typically can qualify for a home equity line of credit.

The idea is that you’re taking a loan at a much lower interest rate than your credit card. But as Mary mentioned, you know, the downside is that, yes, you are increasing the amount that you owe on your home and using your home as collateral. 

So that’s something that you definitely don’t want to take lightly. But if you’ve got a good bit of equity in your home, it can be a really inexpensive way to get rid of high interest debt and clear out the credit cards.

And you just want to make sure that you don’t rack up those credit cards again. If you use the home equity to pay off the credit cards, you need to really be disciplined going forward to make sure that you don’t get into a situation where you’re accumulating more debt.


Absolutely, Laura. And so that kind of brings me up to step six. You know, if you’re struggling to keep up with your minimum monthly payments, and you’re looking at these options, and you don’t think any of them are for you, we really encourage people to look into credit counseling.

So, reaching out to nonprofits, like the National Foundation for Credit Counseling, could really help people talk to trained debt counselors who can help negotiate lower rates for them, consolidate their debt, or even give just some extra guidance.


Yeah, that’s great advice. Let’s go back to the balance transfer cards. Mary, if you’re looking and

shopping for a transfer card right now, what are some things that you should be looking for? And should you just go with a card that you’ve already got? Or does it make sense to apply for a new card?


If I was looking for a balance transfer credit card, I would look for a great intro offer, like we talked about with no annual fees, and a lower or no transfer fee on that balance transfer. The best balance transfer credit cards may have a low intro APR offer for that set time period that we talked about, which one we mentioned earlier, allows you to spread out your repayment over months without the threat of those high interest charges.

However, like I mentioned before, the introductory offer won’t last forever. So, make sure you keep an eye on that. Because the interest rates afterwards, like you mentioned, jump up to variable rate. Also, another thing that I like to mention is that people should also keep an eye on that balance transfer fee. It can amount to anywhere from 3% to 5% of that balance transfer amount.


Yeah, so that is kind of the cost of using a balance transfer card. In some cases, I’ve seen 0% transfer fees, but that’s very rare. So, you typically do have to pay that. But if you weigh that against your interest savings over those 18 months, or whatever that promotional period is, in most cases, you’re still going to come out ahead.

That is just something to consider. You need to subtract the transaction fee out of your math when thinking about doing this and what the potential savings are.


Yeah, absolutely. And you asked also about whether or not you should use an existing card to transfer or open a new card. And I think it can be tricky, it kind of depends.

So, balance transfers could be done with an existing transfer offer. But if that existing card already has a balance, then the transfer will only increase your credit card balance and the debt that you have on that one. And you have to keep in mind also that your payments toward the card will go to the existing balance first and not the balance that you transferred.


Yeah, that’s a great point, Mary. That is something to consider, in what order will the payments be applied? 

Tell me a little bit about what credit card issuers are thinking about when you're applying for a balance transfer card. How will an issuer evaluate you, you know, do you need excellent credit? Do you need to prove great income? What are the factors that they want to see?


Yeah, issues are typically reviewing things like your credit history, your credit score, your income, and monthly housing payments, and any of your existing debts.


Depending on your current financial situation, you may or may not get approved. If you’re looking for a new card, you are going to have to have the minimum requirements to get approved. So, if you already have a card, you know, that may be something that you want to consider if you’re struggling with your credit or income right now and feel like you could not get approved for a new card.

Tell me a little bit about the end of the promotion. Let’s say we’ve gone to Citizens, we’ve gotten a new card where we’ve transferred a balance, and we’ve been able to save money. When that promotional period expires at the end of 18 months, what happens?


After that promotional period ends, it really means that you can no longer take advantage of that low intro APR offer that we talked about before. So really pay attention to your interest rates afterwards, they can jump considerably and especially with a market like you mentioned with rates on the rise, it could really add to your credit card debt. And also keep in mind that the interest rate will now be variable.


You do want to understand what the interest rate will be when the promotion ends. So maybe that should be something people look at when they’re shopping around and looking for a card so they compare what’s going to happen after the promotion expires.

And you know, in the best-case scenario, you’ve paid off your debt by the end of the promotional

period! But that may not happen for everyone, you may still have a partial balance. So that balance is going to be treated just like a regular balance with a variable APR. Again it’s going to

change based on what’s going on in the economy and going on with interest rates.

So yes, it’s definitely a pretty cool tool, when you think about it. Doing a balance transfer is something that you may not want to do many times in your life, you know. But there may be situations where you feel like, hey, I’ve found a great offer. And it makes sense to transfer high interest debt to a low interest balance transfer card and take advantage of that promotion, especially if the promotional period is a long one. 

I think the longer the term the better for you, because you’re going to have more time to take

advantage of it versus it just being a couple of months. So, it really is a great tool. But I do think you have to be serious about tackling your debt while you’re taking advantage of the promotion. Because, as you said, it goes back to a regular old credit card after the promotion ends.

Talk to me, Mary about credit. This is a question I get a lot from listeners who are wondering if they should apply for a balance transfer offer. They’re wondering what is this going to do to my credit? Am I going to kind of be shooting myself in the foot if I apply for a credit card? And you know, maybe I’m already struggling with credit, is this going to set me back? Is this going to hurt my credit?


Laura, that’s actually a really great question, and I get that all the time as well. So, I try and remind people that actually your credit score is not impacted by the physical balance transfer. But it could change based on what happens before and after.

So, for example, the issue of a balance transfer credit card will do an inquiry onto your credit, which could cause your score to dip slightly. But that could be temporary. So, unless you have four or five inquiries from the previous 12 months, the effects should only be minimal. And like I mentioned, temporary too. And even though your balance transfer credit card could have a low intro APR, you’ll still have to make your minimum payments. So, one or multiple missed payments could negatively impact your credit score as well.


Yeah, so you do have a little bit of a ding to your credit when you apply for a new credit account. And as Mary mentioned, that’s probably quite temporary. It may not have much of an effect on your credit, unless you have had lots and lots of inquiries. 

And yes, as long as you handle that card responsibly, that should help your credit, right?


Yeah, absolutely.


So, if you’re not missing payments, you know, you’re making everything on time, having that additional credit account actually helps you prove that that you are responsible with credit, and that will cause your score to increase. It could be a positive net effect, you know, maybe worst case, it’s a wash, as long as you are handling the card responsibly and paying on time.

Mary, what else should people think about as they’re really working to get out of credit card debt and thinking about trying to eliminate as much as possible in the light of rising interest rates right now.


I guess the last piece of advice that I would add is kind of general advice that I would give anyone when they’re trying to save or think about their future life goals. So, every penny counts, always look for opportunities to save a penny here and there. And any additional savings you can put towards your debts will really help and I know it can be tough to think about cutting back on some things. 

But maybe there are things like instead of eating out or doing takeout, a couple nights a week, you cut it down to one, you know, put that savings from not going out towards that debt. And the little things will really make a big difference over time.


It’s so true. You know, I remember when I was just starting out and really struggling with some debt that I had accumulated. My husband and I really just made a commitment to each other that we were going to cut back everything we could and save every way possible. We just funneled all of that extra money toward our debt.

And I think within about a year and a half, we had it all paid off. And I remember how good that felt. I mean, it was an amazing feeling to be like we did it! We made some sacrifices, but we didn’t have to make those sacrifices forever.

If you can keep that in mind and remember that you can do anything for a few months or even you know, a year, you can really just buckle down. And I know it’s difficult to make some difficult choices and sacrifices, but it will pay off.

And it will really make you feel fantastic when you’re not putting all of your money toward your debt every month, and then it frees you up to do other things like beef up your emergency fund or put more money toward your retirement savings. You’ll have all of that extra money to go toward the other goals that you may have.

It doesn’t mean that you stop using credit cards. But it means that you really make a commitment to only charge what you can pay off in full each month, if you can do that, you are really getting the best out of your card. 

Because if you’re not having to pay interest, you’re getting all these great benefits and

conveniences from the card, but you’re not having to pay anything for it. So, when you get to that point in life, it makes you feel pretty darn good. 

And I can tell you, as somebody who has paid off credit cards in full, for decades, it’s just sort of the way I live, I will not make a charge, if I don’t know for sure that I can 100% pay it off at the end of the month. It’s just kind of a mindset shift, I think in the way that you use cards.

Take a bit of a different approach and almost use them like a debit card, you know, pretend like they’re a debit card, when they’re really a credit card. If you can do that and make sure that you can always cover those charges, you’ll be able to pay them off in full.

And that does such incredible things to your credit score, too, when you keep a really low utilization rate. And then as your credit score builds, you find that, wow, you’re saving money, if you do need a car loan, or you do need a home loan, having that great credit is going to save you tons of money on any future loans and borrowing that you may need to do.


You’ve brought up so many great points, Laura, I handle my credit card actually similarly to you where I pay it off every month. And, and keep in mind, you know, my budget and what I can spend each month and I’m just hoping that, you know, we can help others get to that point as well.


We’re all in a different place with debt in our finances. I think the idea is really just to inspire people that you know, it is possible to get to the point where you can pay it off and live, you know, maybe not a completely debt free life. 

I’ve got a car loan and some other debt, but I’ve definitely not let credit cards rule my life, I try to rule my credit cards, instead. I think that’s what we need to do, to feel like we’re in control of our financial tools. And that’s what a credit card is–it’s a tool that you can use for your financial life.

And if you’re in control of it, then you’ve got the power. If you let it control you and you let it cost you a lot of money and interest. It’s just going to cause your overall financial life to suffer.

So, the idea here is to acknowledge what you’ve got, really make a plan, think about ways that you can either consolidate the debt, use a balance transfer offer, make some sacrifices to pay it down, really just create a solid plan.

And as you mentioned, Mary, tackling them from the highest interest rate down to the lowest interest rate is usually the smartest way to go. Now, if you’ve got a little tiny debt, that’s a low interest rate that you just want to knock out, you know, on one of your cards, I’d say go for it, if that will give you a feeling of accomplishment. 

But in general, tackling high to low interest rates is what’s going to save you the most. So, that’s why Mary and I are recommending that. Mary, anything else you think listeners should know, before we wrap up?


Definitely go to


Mary, thank you so much for coming on the show.


Thank you, Laura.


A big thanks to Mary for a great interview!

And Kelly, I hope this helps you understand more about the pros and cons of using a balance transfer card. The bottom line is that if you can make a plan to pay off all or most of your balance before a transfer cards promotion ends, it can save you a significant amount of interest. Just be sure to shop around for the longest promotional period, the lowest transfer fees and the lowest interest rate that will apply after the promotion expires.

And before we go, I want to invite you to connect with me on Twitter at LauraAdams or again on

Instagram at LauraDAdams. And I hope you’ll visit, my personal site where you can use my Contact Page and learn more about my work, books, and money courses.

That’s all for now. I’ll talk to you next week. Until then, here’s to living a richer life!

Money Girl is a Quick and Dirty Tips Podcast. It’s audio engineered by Steve Rickeberg with editing by Adam Cecil. Our advertising operations specialist is Morgan Christiansen, our digital operations specialist is Holly Hutchins, our marketing and publicity assistant is Davina Tomlin, and our intern is Brendan Picha.


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