Suze Orman Swears By Balance Transfers For Credit Card Debt Management: 5 Reasons You Should Like Them Too


Are you considering slashing your credit card debt? Personal finance guru Suze Orman recommends balance transfers as a clever way to manage high-interest payments. Essentially, you shift your debt to another card offering 0% interest for usually 12 to 15 months, allowing you to focus on repayment without the burden of accruing interest.

Orman supports using balance transfers to cut down the cost of your debt. Despite an initial fee — typically about 3% of the transferred sum — the pause on interest can provide significant relief compared to the usual rates of 16% or higher. Here are five compelling reasons to consider a balance transfer.

1. Save Big on Interest

A balance transfer card can potentially erase your credit card debt months sooner without paying any interest at all. Image: Dall-E 3

Imagine you owe $7,600 on your credit card, which charges a hefty 27.49% APR. Normally, you’d shell out $1,848.79 in interest alone over 19 months. Switch that balance to a card with a 0% intro APR offer, and you could wipe out the debt three months earlier without paying any interest. That’s nearly $100 per month back in your pocket!

2. Speed Up Your Debt Repayment

Without the burden of interest, every dollar of your payment attacks the principal. Image: Dall-E 3

Without the burden of interest, every dollar you pay goes straight to reducing your principal. This not only speeds up your debt repayment but also motivates you to possibly increase your monthly payments. Watching your debt disappear faster can be incredibly motivating!

3. Simplify Your Debts

Balance transfers shine in their ability to consolidate multiple high-interest debts into one. Image: Dall-E 3

Balance transfers can consolidate your debts into one account. This makes it easier to manage your finances and reduces the chance of missing a payment. It's a neat way to replace multiple high-interest card debts with a single, manageable payment.

4. Boost Your Credit Score

High credit card debt can hurt your credit score, especially if it skews your credit utilization ratio. Image: Dall-E 3

High credit card balances can hurt your credit score, especially if your debt nudges your credit utilization ratio above 30%. Transferring your balance to a card with a higher limit can help you reduce this ratio faster as you pay down your debt, which can improve your credit score over time.

5. Enjoy Extra Perks

Some balance transfer cards also offer cash signup bonuses. Image: Dall-E 3

Some balance transfer cards offer sign-up bonuses that can be tempting. For example, the Capital One SavorOne Cash Rewards Card offers a $200 bonus if you spend $500 in the first three months, on top of 0% APR on purchases and balance transfers for 15 months. Just be wary that chasing bonuses shouldn't distract you from your main goal of eliminating debt.

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