Hi I'm Nick Clements, co-founder of Magnify and let's talk about balance
transfers and saving some money. Balance transfer is the single best way to
significantly reduce the interest rate you're paying on your credit card debt
which will then help you pay that debt off a lot faster. So how does it work?
Let's say you've got debt sitting with a with a bank at a very high-interest rate.
You may not like it, in fact, I'm sure you don't, but all the other banks out there
they love it. And in fact, they want to compete for it because they make money
off of it. So if you go out and shop your debt around banks will actually come to
you and say look for 18 months or 24 months we'll give you a zero percent
interest rate on that debt. We'll charge you a one-time fee but a zero percent
interest rate on that debt. And so it's effectively you have the ability to go
out and move your debt and get a much lower interest rate which will
ultimately save you thousands. So the overall strategy that you need to
do for choosing a balance transfer is first, come up with a list of the debt
that you have, the interest rate on that debt, and the bank that it's sitting with.
So you have debt sitting on Bank of America to get a good balance transfer
offer, you can't go to Bank of America— they're already getting your money.
That's like going to Time Warner saying I have Time Warner broadband can you
give me a bonus for switching? It doesn't work that way. You need to find another
bank to help reduce your debt. So, in this example we have Chase. So let's say you
find a really good balance transfer offer from Chase, Chase is happy to give
you a great deal if you move the debt from Bank of America to Chase. So what
you do is once you have your list of: this is the debt I have, these are the
interest rates that I'm paying, and these are the banks that I'm with, then visit
MagnifyMoney.com— the balance transfer page—put in how much debt you have, what
is your interest rate, and how much you can afford to pay a month, and you will
then see a list updated daily of the best balance transfer offers that are
sitting out there. You should then choose the best offer from a bank other than
the one your debt is already with. First, make sure you complete the balance
transfer within 60 days of opening the credit card. It's a great first step to
get the balance transfer, but that window will close and if you don't move the
debt before the 60 days, you lose the opportunity to get the promotional rate.
Second, take that credit card that you receive in the mail and just put it in
the freezer—don't spend on it. Because if you spend interest accrues right away.
And finally, make sure you have a plan for when the promotional period is over.
So if you have an 18-month balance transfer and in month 17 you still have
a balance remaining, come to MagnifyMoney.com look for the next best
balance transfer and then transfer that debt before the interest rate increases.
So if you have a plan you can make sure you keep your interest rate low and take
years off your debt repayment. Yes, there is a fee there is a one-time upfront fee—
it is put into your balance of three percent, but over the time period—and
we'll do the math for you on MagnifyMoney.com—you'll see how much you save.
But there is a one-time upfront fee and that largely covers the bank's cost of
acquiring you as a customer.
