Balance transfer strategy- fee and interest free
Most balance transfers aren't free these days. At best, they'll charge a percentage of the transfer amount as a one-time fee and offer you an interest-free period. Some offers are the opposite, with the transfer itself not incurring any one-time fees but the balance is charged interest. And those are best-case scenarios.
But there is a simple workaround to get a balance transfer that is effectively free of any fees or interest.
The idea is quite simple. Let's say you purchased new furniture and now you're being charged interest for $5000. You may have just enough money for your regular monthly expenses but not enough to pay off your extra debt. Assuming you have decent credit, you can open 1 or more credit cards that offer 0% APR for a specific amount of time (usually 12-18 months). You then put all your regular expenses on that card(s). When it comes time to pay, instead of paying the minimum payment plus interest on your old credit card, you pay the full amount of that month's expenses towards the old debt. You then pay only the minimum payment of your new credit card bill(s). You won't need to pay any more than that since you have a 0% grace period.
So as an example, if you normally spend $2500 a month on groceries/tuition etc., you'd put these expenses on your new 0% APR credit cards and then use your regular income to pay off the older debt which is being charged interest.
But it gets even better than that. In the process of opening your new cards, you may have the opportunity to earn a significant welcome bonus. This is especially true if you open 2 cards. Opening more than one card can actually be beneficial to your credit score. This is because it's recommended that your total credit card balance doesn't exceed more than 30% of your total credit limit. Spreading your debt over more than 1 card allows you to maintain a lower balance on both cards.
If you want to open 2 cards at the same time, you're most likely to be successful in applying for cards from 2 different banks, such as Chase and American Express. Here is an example of 2 cards you can open. Both have a nice welcome bonus and great rewards categories.
Chase Freedom Unlimited or Freedom Flex,-$200 back after spending $500 within 90 days of opening the card, plus 5% back for gas purchases for the first year (for up to $6000 in spend) and of course 0% interest for the first 15 months! This link is for both Freedom cards. The information here is accurate as of this writing, but the offer is always exactly what you see displayed on the landing page after clicking the offer link, so be sure to double-check before you apply. Remember that you can have both types of Freedom cards, so if you already have one of them, simply apply for the other one, they're a great combo! You can also click here to read our post explaining the differences between the 2 Chase Freedom cards.
American Express Blue Cash or Blue cash preferred. (One link for all current Amex card offers- scroll down until you see "Explore Other Cards" if the card offer you're looking for isn't the one featured on top). The Preferred version welcome bonus is $350 after you spend $3,000 in purchases on your new Card within the first 6 months of Card Membership. It also earns 6% cashback on groceries for the first $6000 purchased in a calendar year. The preferred version also offers an unlimited 3% back on gas and transit. Both offer 12 months of 0% interest. There is a $95 annual fee for the preferred, but it's waived for the first year in this current offer and you can always downgrade to the fee-free version for the second year. The free version is great too, but with lower rewards and benefits. Again, this is accurate at the time it was published but be sure to double-check the offer details on the offer landing page as that will be the final say.