Personal Finance

I have $12k in debt and I just got approved to transfer my balance to a $0 fee card - what's my first move?

Javier Simon

Published: January 16, 2025 9:00 am

So as I was surfing Reddit, I came across a very interesting post about something none of us like: Debt.

Basically, the Redditor was in debt to the tune of around $12,000. However, this individual had been approved for a balance transfer card with 0% APR for the first 21 months and a balance transfer limit of $5,000.

Balance transfer cards are pretty neat because they allow you to move your debt to a new card. But the upside here is that the new card could offer 0% APR for a set period. So you can essentially pay off your debt interest free as long as you do it in that time frame.

In this case, the balance transfer won’t cover the individual’s entire debt, and the Redditor wants to know how to proceed. So let’s take a closer look.

The numbers

• Total Debt: $12,000 (estimated)
• Balance transfer card limit: $5,000
• APR: 0% for the first 21 months
• Balance transfer fee: 5% ($250)
• Debt outside balance transfer card: $7,000

Some perspectives

First, I’d want to make sure that I can at least cover the $5,000 balance transfer in 21 months. That translates to about $238 a month (Add in a 5% balance transfer fee or $250 to kick things off). This is important because the APR on balance transfer cards usually jumps up to standard credit card rates at the end of the introductory period. The average credit card interest rate is about 23%. And that would just pile up more debt.

However, this doesn’t necessarily mean the Reditor should focus on paying off the $5,000 balance transfer card first. The remaining $7,000 should take priority because it’s still accumulating interest. So it could help to make at least the minimum payments on the balance transfer card and aggressively tackle the interest-accumulating $7,000. There are a few ways to do that.

A few options

The Redditor could try applying for a personal loan to cover the remaining $7,000. Depending on variables like credit score and amount of debt, personal loan interest rates could be as low as 12.48%. And the borrower could have as much as five years to pay it off. This would allow the Redditor to make smaller payments on the larger debt as they chip away at the balance transfer card with 0% APR.

But there are other ways. The Redditor could tackle the larger debt through the snowball or avalanche methods.

Snowball method: You take the debt with the lowest balance and make larger payments to pay it off faster. Once you’ve paid that off, you take what you would have paid on that debt and add it to the minimum payment on the next smallest debt. You continue until all debt is paid off.

Avalanche method: You start with the debt that has the highest interest rate and focus on paying that off by making larger payments. You then take what you would have paid on that debt and add it to the minimum payment on the debt with the next highest interest rate. Continue until all debt is paid off.

In any case, the Redditor should make at least the minimum payments on all debt to avoid late fees and other hassles. Plus, the Redditor said they don’t plan to use the card on new purchases even though these would come with 0% APR for the first 12 months. This is a good idea. When strategizing to pay off debt, it’s key to avoid taking on new debt.

Please note that this is just my personal opinion and not financial advice. It can always help to seek the guidance of a qualified financial advisor when trying to manage your debt.

The Takeaway

Debt is a serious issue that plagues more people than you may think. But there are ways to climb out of it. It all starts with a plan. Review your options and come up with a strategy. It’ll take time, sacrifice and discipline. But in the end, it pays off. And you could walk away with the financial freedom to meet your goals.