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12 Tips On Transferring Credit Card Balances That You Won’t Want To Miss

12 Tips On Transferring Credit Card Balances That You Won’t Want To Miss

Transferring credit card balances can be a great move financially. It can get you out from under exorbitant interest rates and give you a fresh start on making payments. Some credit cards even have low introductory rates from zero percent to 5 percent that can make paying off your balance easier and faster. That said, transferring credit card balances is a slightly convoluted process that you should be more educated about before proceeding. Here are some tips to help you figure it out.

1. Your debt will get bigger before it gets smaller.

Back in the day, transferring balances used to come at a rate with a maximum fee. That means you’d pay 3 percent or something like that for a certain amount but no more than $50-$75. These days, transfer caps are gone. If your balance is small then this isn’t a big deal but if you have thousands of dollars in credit card debt, the transfer fee can add up quickly. It is unavoidable but make sure you know how much will be added back onto your debt when you transfer the balances.

2. The introductory interest rates can be a trap!

Like we mentioned, some credit cards come with introductory rates between zero percent and 5 percent. These typically last for 6-12 months. If you cannot pay back your balance before the introductory rate, then you should pay attention to what the regular rate will be. These higher rates can range from 12 percent to 18 percent or even higher depending on your credit. Do yourself a favor and sit down with a calculator and make sure you’re actually saving yourself money by switching over!

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3. If you don’t pay your dues, they’ll make you pay in other ways.

While we’re on the topic of introductory rates, let’s talk about what happens if you don’t pay your bill. Pretty much all credit cards will cancel your introductory rate and give you the regular rate if you fail to make payments on time. Remember folks, there is no grace period when transferring credit card balances. Do not skip a payment or it can cost you!

4. Don’t neglect your debt while transferring credit card balances.

The process of transferring balances from one credit card company to the next can take some time. Experts say that it can take a month or longer for the process to complete. During this time, you’re still responsible for paying your bill every month. We’ve already discussed what can happen if you don’t make payments on time. Don’t sabotage yourself!

5. The best rates are reserved for those with good credit.

Sadly, those of us with bad credit don’t get the same features with new credit cards that people with good credit will receive. You may see credit cards that brag about having low introductory rates but if your credit is bad then those rates probably aren’t meant for you. It’s not uncommon for people with bad credit to be forced into taking less appealing offers like no introductory rates and higher APRs overall. You can still apply and try for things like introductory rates but don’t base your financial future on credit card features you may not be eligible to receive.

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6. Even more introductory rate confusion.

Some credit card companies will only give you the introductory rates for the amount of your balance. This means any purchase you make could be subject to the regular APR. For example, let’s say you transfer your balance of $3000 to the new credit card at the introductory rate of zero percent and then you go buy a laptop for $500. The $3000 would have the zero percent introductory APR while the laptop would be subject to the regular APR. Here is the kicker. Since most credit card companies apply payments to a split-rate account to the balance with the lower interest rate, that means that $500 will continuously increase until you pay off the $3000.

7. Don’t be a transfer junkie.

After reading through here, you may be thinking of getting a credit card with an introductory rate and then transferring to a new credit card with a new introductory rate in a year. It sounds like a good plan but you can be penalized for doing this. If you transfer your balances too many times, your credit can be penalized. Since paying off a credit card is supposed to increase your credit score, doing anything to prevent that is actually counterproductive.

8. Slash your cards.

This isn’t a technical tip but rather a figurative one. Due to all of the confusion and complexity of transferring credit card balances, it’s probably in your best interest to just hack up the cards. The accounts can remain open but let’s face facts here. If you’re in the kind of financial crunch that can motivate one to transfer balances, then you should probably not give yourself an opening to make it worse. Cut up the cards, pay off the debts, and many of the pitfalls we discussed today don’t apply to you.

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9. Take your time and find the best deal

This applies to everything, ever. Finding a credit card with a 12-month introductory APR of zero percent may sound great, but paying 18 percent APR after that could be very bad. Meanwhile, there may be a card out there with a flat 12 percent rate that would be a better deal in the long run. Shop around, do the math, and find the deals that will save you the most money. Do not get suckered into a bad deal because of an appealing opening offer. Finally, be especially careful of the old bait-and-switch tactic. An example of this is being pre-approved for a certain card with a certain balance and a certain rate but when you go to officially apply, you end up with something much worse than that. Unfortunately, this does happen.

10. Don’t try too hard or you’ll never get it done.

As with any other loan process, applying for a new credit card requires a credit check. It’s pretty much common knowledge that if you ping your credit over and over again then it will cause your credit to go down. If you can’t secure a credit card after a couple of tries, it’s best to give up and try again in a few months to avoid harming your credit because otherwise you may lower your credit which will just make it harder to get another credit card!

11. If you don’t slash it, then don’t spend it.

Earlier we suggested that you slash the old and new credit cards and we stand by that advice. However, we also understand that you may need to keep one of them around for emergencies. Spending $250 on a credit for shoes is a horrible idea but spending $20 in gas to get home because you don’t get paid until the next day is totally understandable. Should you decide to keep your old or new credit cards around, we recommend you don’t spend anymore money than absolutely necessary.

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12. Why are you in this situation to begin with?

If you’re transferring credit card balances then you are in some sort of financial trouble. Generally, the only two reasons people transfer balances is to switch to a card with a lower rate or because they’re experiencing problems with their current credit card and need a fresh start. In either case, look into what caused this problem. While transferring balances can save you money in the long run, it won’t save you that much money month to month. If you’re having trouble paying your credit card now, you’ll have trouble later too. Fix the underlying problem and you may be able to avoid this whole mess!

Wrap up

The bottom line is simply this: be educated. Make sure you read everything before you sign any paperwork. Don’t let fast talking customer service reps try to rush you. This is your money and your life and if you don’t feel in control of the situation then take a step back and assess the situation. There are no shortcuts so work hard and get it done.

Featured photo credit: Digital Trends via digitaltrends.com

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Joseph Hindy

A writer, editor, and YouTuber who likes to share about technology and lifestyle tips.

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Published on May 7, 2019

How to Invest for Retirement (The Smart and Stress-Free Way)

How to Invest for Retirement (The Smart and Stress-Free Way)

When it comes to stocks, I bet you feel like you have no idea what you’re doing.

Everyone who’s not a financial expert has been there. I’ve been there. But, time is passing and you need to be crystal clear with how you’re investing for your retirement.

Otherwise, it’s back to work until you can afford not to. So, how can you invest for retirement when you’re not a financial expert?

You take the time to learn the fundamentals well. If you do, you can grow your wealth and retire happy. The best part is that you don’t need to be a financial expert to make smart investment decisions.

Here’s how to invest for retirement the smart and stress-free way:

1. Know Clearly Why You Invest

Odds are you already know why should invest for retirement.

But, maybe you know the wrong reasons. It’s time you get clear on why you’d like to retire. Here are some questions to help you get started:

  • Will you spend more time with your family?
  • What does retirement mean to you?
  • Are you looking to launch that business you’ve been holding off for years?

Everyone wants to retire but not for the same reasons. Once you’re clear for why retirement is important for you, you’ll focus on making it happen.

Investing in the stock market allows you to take advantage of compound interest.[1] All this means is that your money earns money on top of its interest. A reason why investment in the stock market is one of the best ways to plan for retirement.

2. Figure out When to Invest

“The best time to plant a tree was 20 years ago. The second best time is now.”– Chinese Proverb

It’s true if you’d had started investing when you were 10 years old, you’d have a lot more money than you do today.

The reality is that most people don’t start investing until it’s too late. So, if you’re currently waiting for the perfect time to start an investment, it would be today. Open your calendar and block out 2 to 3 hours to choose how you’ll invest for retirement.

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A quick way to get a snapshot of where you stand is to use Personal Capital. Input all your personal information and spend some time setting your retirement goals. Once completed, you’ll know where you stand with your retirement.

Having a savings account for retirement isn’t planning for retirement. Why? Your money loses value when you factor in US inflation.[2]

3. Evaluate Your Risk Tolerance to Create the Perfect Portfolio

Investing your money well depends on your emotions.

Why?

Because when the market drops most people panic and withdraw their money. On average, the US stock market yields an annual 6% to 7% ROI (return on your investment.) But, this won’t happen if you’re worried about short-term loses.

Before you invest your next dollar, know your risk tolerance.[3] Your risk tolerance determines the number of risky and safe investments you’d have.

Regardless of your investing style, you need to view investing for retirement as a long term game. Know that some years you’ll lose money but recoup this in the long-term.

Avoid watching market-related new. Also, create a double authentication to log in your investment account. This way you’re less likely to withdraw your money.

4. Open a Reliable Retirement Account

Depending on your circumstance, you may need to open a new brokerage account. This is the account is where you’ll invest your money.

If you’re currently working for a company, odds are that they offer a 410K investing account. If so, here’s where you’ll invest most of your money. The only problem with this is that you’re limited to the stock options that are available.

You do have the option to open a separate IRA (individual retirement account.) Here are some of the best brokers:

  1. Vanguard
  2. TD Ameritrade
  3. Charles Schwab

5. Challenge Yourself to Invest Consistently

Committing to invest for retirement is hard, but continuing to do so is harder.

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Once you’ve started investment for your retirement, you run at risk from stopping. Often you’ll want to contribute less, so you’d have more money in your pocket.

That’s why it’s important that you create a budget that allows you to invest each month. If you’re working for a company, you can set a percentage for the amount you’d like to contribute each month. Most people by default contribute 1% but aim to contribute 10% to 15%.

Be the judge for how much you can afford to contribute after covering important expenses. To stay motivated, use Personal Capital to view your net worth.

A benefit to contributing money to your retirement account is not taxed. For example, if you earn $100 and invest 10%, you’d contribute $10, then get taxed on the remaining $90. As of 2019, the most you’re able to contribute towards your 401K is 19K but this can change.

6. Consider Where to Invest Your Money

The most common way to invest your money is in stocks, but it’s not the only way. Here are other ways to invest:

Robo Advisors

Robo-advisors[4] are fancy algorithms that’ll choose the best investments for you. Sites like Wealthfront make it easy for first-time investors to invest their money. You’d input information about yourself and set your risk tolerance.

Then, set your monthly contribution amount and your robo-advisor would do the rest. Robo-advisors charge a fee to manage your money, but less than regular advisors.

Bonds

Think of bonds as “IOUs” to whomever you buy them from.

Essentially, you’re lending money and charging interest. Like stocks, not all bonds are equal. Some will be riskier than others depending on their rating.

Here are the different types of bond categories:[5]

  1. Treasury bonds
  2. Government bonds
  3. Corporate bonds
  4. Foreign bonds
  5. Mortgage-backed bonds
  6. Municipal bonds

Mutual Funds

Picture a group of people dumping all their money in a jar that’s managed by a professional. This is how mutual funds work. The fund manager manages the money looking to earn capital gains (interest.)

One of the best types of mutual funds is index funds. Since these funds don’t try to beat the market and instead follow it, they need less research. Because of this they often charge the lowest fees and yield the best long-term results.

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Real Estate

Yes, buying a home is an investment when done correctly.

Imagine buying a home and using it as a rental property. After repairing it, you receive a monthly surplus check of $100 to $200.

This may not sound like a lot, but repeat this process enough times and you’d earn a large amount of passive income. That’s why real estate is one of the best investments to not only retire but become wealthy.

But, it requires a lot of money to start and you should expect losing money along the way as you learn the process.

Savings Accounts

Your money can still grow in a savings account. Nowadays most online banks offer a 2% annual return. Although the average inflation is higher your money will be available when you need it.

7. Master Disincline to Dodge Short Success

Investing for retirement is a long-term strategy. That’s why you need to master delayed gratification. All this means is delaying short-term pleasure for something bigger in the future. Research shows that those who have delayed gratification are more successful.[6]

So how can you master delayed gratification?

By building your discipline.

Think back to what retirement means to you. A clear purpose will help you avoid withdrawing your money during a market downturn. It’ll help you contribute more towards retirement when you’d want to waste it instead.

Your journey towards retirement will be long, so reward yourself along the way. Choose a reward that’s relevant and meaningful, so that you reinforce positive behavior. For example, after contributing more towards retirement, treat yourself to dinner.

8. Aggressively Invest on This One Investment

I’ve mentioned several types of investments but haven’t covered the most important one.

It sounds cliche but here’s why you’re your best investment towards retirement. The more you know, the more money you’ll be able to make. The more good habits you adopt, the more secure your retirement will be.

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More importantly, investing in yourself is an investment that no one can take away. There’s no market downturn nor tragic circumstance that’ll wipe your knowledge and experience.

But, how can you invest yourself?

Reading books, blogs, and anything that’ll help you learn new topics daily. Listen to podcasts and audiobooks on your commute to/from work.

Save money to buy courses and hire coaches. I used to believe hiring coaches was a waste of money when I could learn the subject alone.

But, coaches see your blind spots and hold you accountable. Hiring the right coach will help you achieve your goals faster than you would’ve alone.

Retire Happy with Excess Money

The key to a secure financial future doesn’t only belong to financial experts.

It’s possible for you and I. What if you were able to retire earlier than most people and weren’t a financial planner? What if you were able to focus on what you enjoy doing the most while your money was working hard for you?

I know this sounds impossible now, but the truth is you’re capable of taking charge of your retirement. I’m not a financial expert but I’ve learned how to invest my money by reading books and learning from others.

Investing your money is scary. So start small and invest a small amount of your money with a robo-advisor. Feel your money drop and rise for a month or two. Then, invest more and keep this up until you’re aggressively saving for retirement.

One day, you’ll wake up with a net worth you’re proud of – confident about your retirement. You now know a few strategies you can use to invest in your retirement. Will you take action to retire happy?

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Featured photo credit: Matthew Bennett via unsplash.com

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