Debt can be a curse. I read a study the other day that focused on the health effects of massive debt. It concluded that people who are deep in debt experience higher levels of stress and over a prolonged period of time this can have a damaging effect on their health. Luckily for us there is a cure, get out of debt.
Of all the different types of debt in the world the most common and possibly the worst is credit card debt. This is largley due to the very high interest rates credit card companies often charge. For many of us the solution has been to move our balances over to 0% cards and chip away at it over time. The catch is the fees that these cards often charge to transfer the balance over, on average they are about 3%. That means if you have $10,000 in debt on one card you have to pay $300 to move it over to the no interest card. That just won’t fly.
One solution is to find 0% interest cards with no transfer fees. Cards like the “Slate Visa Card from Chase”. I have mentioned this card in the past and it still remains one of the best cards on the market for debt reduction as far as I am concerned. It has no annual fee, no balance transfer fee, and a 0% interest rate for 15 months. It is hands down the best 0% cards you can find right now.
A new entry into this market is trying a pretty radical approach. The Barclay Ring MasterCard is offering qualified applicants a 1% cash back offer on balance transfers. That’s right they are paying you 1% to transfer your balances to their card. On $10,000 in debt that’s 100 bucks! They have no annual fee and no balance transfer fee. It’s not all sunshine and rainbow though. This card is not a 0% interest card, their interest rate it 8%. This is low for a credit card, but in about 6 weeks that 1% cash balance will have been absorbed by the interest on the debt.
For that reason, this card seems best suited for people who are going to accumulate a large amount of debt, and have the cash on hand to pay it. For example, let’s say you took out a home equity loan to remodel your kitchen. You charge all of that cost of the remodel to a retailer’s credit card to get 5% back on the purchase. My parents did this with their Lowe’s card, they got the cash back and 0% interest and just paid the card off when the bill came in. An added step in this would be to transfer that bill over the Barclay card, get the additional 1% back and then pay it off.
Is all that effort worth it? That’s up to you. If the balance was 15k, you would make $150 on the transfer. That seems worth it to me.
I hope this type of offer starts a trend, perhaps one day we will see credit card companies offering 5% cash back on balance transfers. It seems far fetched, but I thought that same thing of 1% cash back until a few days ago.
Getting out of debt is a key step to financial prosperity. The “BarClays Ring MasterCard” is a great short term tool to help you towards that goal. If you have some credit card debt that you are looking to pay off in the short term or your current interest rate is significantly higher than the 8% APR that the Barclay’s card offers it might be a good idea to transfer you debt over. For a longer term solution the “Slate Visa Card“ might offer you a better value.
*Please consult a financial advisor before making any decisions which might effect you credit score.