‘If it’s just 1 to 3 months more before I get my loan, is there any benefit to transferring my balance to a 0% APR card?’: With high CC debt and renovations looming, should I transfer my balance or wait for a home equity loan?

Hey Money Minder,

I’ve got $13K in credit card debt, mostly from medical bills. But hey, good news – I’m not making it worse! I’ve got over $120K in equity in my house, and I’m planning on getting some renovations done. My big idea is to take out a home equity loan to cover both the renovations and my credit card debt.

The only problem is, I can’t seem to pick a contractor, and in the meantime, I’m stuck paying crazy high credit card interest every month. So, here’s my question – if I have to wait another 1 to 3 months before I get my loan, would it be worth it to transfer my balance to a 0% APR card? Discover is offering me a deal, but the balance transfer fee would set me back $400. Plus, I’m worried about how this might affect my credit score.

Any advice for me, Money Minder?

Thanks for the tips!

(Seeking a Solution)

Response from THE MONEY MINDER:

Hello There,

I understand the stress and frustration that comes with carrying a significant amount of credit card debt, especially when high-interest rates are involved. It’s great to hear that you have a solid plan in place to address this by leveraging the equity in your home for a potential home equity loan to consolidate your debts.

Given your timeline to secure the loan and considering the balance transfer option to a 0% APR card, it could be a practical move to save on interest payments in the short term. Transferring the balance to a 0% APR card can offer you some relief from the high-interest payments you’re currently making while you finalize the home equity loan process.

As for the impact on your credit score, opening a new credit card and transferring a balance may have a slight effect in the short term, but this could be outweighed by the benefits of reducing your interest payments and improving your overall credit utilization.

In terms of the balance transfer fee, while $400 may seem steep, you’ll need to consider it as part of the overall cost of reducing your interest burden. Look at it as an investment in saving money on interest charges, which can add up significantly over time.

It’s important to remember that each individual’s financial situation is unique, so I recommend speaking with a financial advisor or credit counselor to discuss the best course of action based on your specific circumstances. In the meantime, keep a close eye on your spending and focus on getting that debt paid off. All the best from THE MONEY MINDER.