Is it good to keep switching credit cards to pay off debt?
| by Jim Wang |  Print Article
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This question comes from a reader (I’ll spare you the contents of the message) and my quick answer is Yes, though the longer answer comes with a whole slew of caveats. The bottom line is that the key to paying off debt is to exercise financial discipline. Financial discipline means you have to spend less money so that you can put more towards paying down that debt. The more you put towards principal, the better. (duh!)
That being said, switching credits cards to chase a 0% APR balance transfer is a solid strategy as long as you follow the more important financial discipline part. By taking advantage of 0% interest, more of your payment goes towards principal so you’re paying your debt off faster. So, yes, switching credit cards (assuming you’re getting a balance transfer at a rate lower than your current rate) is a good idea.
But, let me stress that the key part of the above strategy is the financial discipline – you have to stop spending. Right now. Not tomorrow… not after the next electronic gadget or nice outfit… right now. Commit to paying off your debt.
Jumping from card to card is going to pummel your credit (more hard inquiries, increased credit lines, etc.) so the 0% APR game is going to yield you a diminishing rate of return so don’t squander it by buying stuff instead of paying off your debt.
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There is one key part to making this strategy work that is missing. You have to execute it perfectly.
One slip up on your end (not making a payment on time or not transferring the balance in time) or one mistake on their end (for example, they don’t record your payment on time) and you could have a big mess on your hands.
Some credit card companies love nailing people with fees and yanking their 0% offers out from under them, so it’s important to be very meticulous and commited to eliminating your debts rapidly.
I totally agree. This is how I managed my $20,000 credit card debt for 6 years. I didn’t put any more debt on the cards unless I could pay it off that month, and I put more towards the existing debt until this year when I truly committed to paying it off.
under FICO 08, you evidently aren’t going to be punished as much for those hard credit pulls that it takes to apply for new credit cards, too.