Ask Wealthy Joe: All About Balance Transfers. Are They Good For My Credit?

One of the main reasons people have a low net worth, and/or are unable to invest in stocks, is credit card debt.

I acknowledge that it’s not the only reason, but it is definitely among the top two or three among many people.

Here’s a Q & A with a person who is carrying some credit card balances and looking to pay them down.

Q: My credit card balances have high interest rates.  Is there anything I can do?

A: The first thing you could do is call the credit card company and ask if they would lower your interest rate.

The next best step is to transfer your credit card balance to a card with more favorable terms. If you can find one that will not charge you interest for up to 28 months, that’s all the better. No interest payments will allow you to pay off the principal much sooner.

Q: How do I find the best offer?

A: It depends on your credit score. The higher your score, the easier it will be to find a card with better terms. If you have a low score, unfortunately you might be stuck with the card you have.

Q: Will the balance transfer affect my credit score?

Since the new company will have to run your credit, your score will take a slight hit. However, a deal that allows you to pay down your principal for a year or more is well worth the five points it will cost you!

Remember, a balance transfer will not erase any derogatory information from the prior credit card. Any late payments will unfortunately remain.

All in all, a balance transfer is a very smart move if you can find a good deal. Let’s say you are paying $100 a month in credit card payments. Once you pay that off, you’ve freed up $1200 a year – to invest in stocks!


My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)



One Way or Another, You Pay Credit Card Debt.

Good morning.

I wanted to take a break from the markets today and talk about debt for a bit.

One of the biggest financial mistakes people make is getting too deep into credit card debt.

Too much credit card debt can come back to haunt you in the event of a loss of income due to a job loss or illness.

Here’s an example.  Let’s say you have $10,000 in credit card debt, suddenly lose your job, and find yourself unable to pay back the loan.

Eventually the credit card debt will go into default, and the credit card company will charge the debt off as a loss.  You will then be hounded by debt collectors who purchased your debt from the original credit card company in hopes of recouping some, if not all, of the balance you owe for a profit.

Debt collectors have a seven-year window to legally collect the debt from you.  If they fail to do so in that time limit, they cannot legally pursue the debt.

At that point, you may think you’re in the clear.

Not quite!

The IRS will recognize any debt that you have been excused from paying as income…and tax you accordingly!

So the $10,000 in debt you did not pay will be considered income as far as the IRS is concerned, and you may get hit with a tax bill of between $2000 and $3000.

So just remember, when it comes to credit card debt (or debt of any kind), you will pay one way or another.

*  The Stock Market is For Everyone, Eric Milton’s short guide to stock market investing for beginners, is available in e-book and paperback formats.  If you like what you see on this blog, we hope you’ll take a moment to purchase and read the book, let us know what you think via a blog comment or Amazon review, and share this information with others!  Thank you. *