Occasionally, Get Rich Slowly will feature reviews that alert you to new product offerings that you may be interested in. While we haven’t covered a specific credit card offer in a while, this afternoon we’re alerting you to a offer by Slate® from Chase – a 0% introductory APR on balance transfers with an introductory offer of no balance transfer fee on the amounts transferred during the first sixty days your account is open.
One of the drawbacks of a balance transfer credit card is the fact that these days you usually need to pay a fee on the balances you transfer.
Not so long ago, the norm for balance transfer credit cards was that they would offer you the opportunity to transfer balances to a new card with 0% interest for a fixed promotional period – with no balance transfer fees. Some used this as an opportunity to conduct credit card arbitrage using a combination of credit cards and savings accounts to profit from these offers. For their part, credit card companies would bet on the fact that you wouldn’t pay down your debt during the 0% promotional period, and that you would become a profitable customer in the long run (both on interest on the debt you revolve as well as through the interchange fees they earn with every transaction).
However, for a long period of time, those offers disappeared and fees were instituted on balance transfers, in which you incurred an expense when you transferred your debt to a new credit card (often right at, or right after, the time you applied for the card). These fees are usually expressed as a percentage of the balance transferred, and today most often range from 3 to 5%. So if you decide to transfer $5,000 from a high-interest credit card to take advantage of a promotional 0% interest rate (e.g., 0% for 18 months), you can end up paying as much as $250 right from the get-go. $250 is a lot to pay to “start saving money.”
The Slate® from Chase is one of the first cards we’ve seen heavily promoted in a long time that allows you to transfer higher-rate balances without balance transfer fees, as long as the transfer occurs during the first sixty days the account is open.
Before we go any further, let’s be clear: the best way to get rid of your credit card debt is to simply pay it down. Period. If having credit cards is what got you into the debt in the first place, then you should not be applying for this or any other credit card. You should take the following advice from our post on how to get out of debt: “Stop using credit. Don’t finance anything. Cut up your credit cards.” You wont help your debt situation if you keep adding to it.
However, if you are unable to pay the debt immediately AND can refrain from adding to your debt, this card could possibly help as it has no annual fee and a promotional 0% interest rate on purchases and balance transfers for 15 months. This could give you some breathing room to pay off your balance – just make sure you pay it off before the promotional period ends, otherwise you’ll find yourself back in the same situation as before (or worse if you have accrued additional debt).
Note: this card is only for those who have good or excellent credit. So if you don’t think you qualify, you shouldn’t apply as some believe applying for a credit card may affect your credit score negatively and you most likely wont have the credit card in the end anyway.
There may be other credit cards that are offering no balance transfer fees on balances transferred. If there are we don’t currently know of any so please mention any others in the comments.
There are numerous stories of people who found themselves in over their head with credit card debt (many of them by personal finance bloggers such as JD himself), but it is possible to use a credit card without going into debt.
Have you successfully used a credit card balance transfer to help you get out debt? Tried to use a balance transfer card to manage your debt, only to make the situation worse? Share your thoughts below.
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