I have a credit card that is just about maxed out. I'm trying to get into financial health but the purchase interest charges are killing me and it's hard to get ahead. My cash flow is also terrible right now. Would I benefit from trying to transfer to a 0% card for a while? Does my credit have to be good to do so?
My concern is that just moving the balance will make you feel like you've accomplished something, when you really haven't. Sure you'll save on interest but that just reduces the rate at which you're bleeding and doesn't heal the wound. It's entirely likely that you'll feel freed by the reduced balance on the original card, ignore the transferred balance since you aren't paying any interest on it, and soon you'll have two cards that are maxed out.
I would instead look at getting your expenses under control. Make sure you have the start of an emergency fund - 1-2k depending on your family situation. If you are single start with 1k; if you have kids bump it up to 2k or maybe a little more just to avoid charging any expenses. Get on a written budget, and don't spend any money in the next month that is not accounted for. Then you can figure out how much you can afford to put towards the credit card. That will also tell you how much interest you're going to pay.
The only way I would recommend the balance transfer is if the interest savings (after the balance transfer fee) reduced the time it takes to pay off the card by two or more months (since one month isn't going to make a big difference interest-wise), and you immediately cancelled the original card, and cut up both cards (including the new one), making payments by mail or online.
Other than that, the interest saved after the balance transfer fee probably isn't worth the risk of being in a worse situation on the other side.
There are a number of ways to get out of debt. First, stop spending on that card. You could apply for a 0% APR credit card and if you qualify with a credit limit equal (or higher) than what you have now, then you could transfer the balance and start on paying that down. You could also work out a payment plan with Chase - they would rather have some of the money vs. none of it. But you need to reach out sooner rather than later to avoid having it sent to collections.
Since your cash flow is terrible, you could also pick up a second or third part time job - deliver pizzas, work at the mall, whatever, to help increase your cash flow and use that money to pay down your debts.
The Federal Trade Commission has some resources on how to cope with debt.
This is pretty simple in theory, harder to do in practice.
- Stop borrowing. Cut up all credit cards, you can even close the accounts while there is a balance. This should answer the question about 0% transfer (no). Interest rate is not your problem.
- Stop spending. No entertainment, no eating out, minimum clothing maintenance, turn off cable, anything you can do to cut spending.
- Work like an insane person. Get an extra job or three, whatever you can do to earn money.
- Throw all extra money at the debt.
You will be surprised how quickly the debt will disappear. Doing these things will work, I know from experience.
As far as I agree to everyone saying that "you should stop borrowing" & etc, I see a lot of sense of getting balance transfer cards if you are actually paying it off.
Considering a scenario, you have a CC with balance of $5000 on each at roughly ~24% interest which results in ~$1200 interest per year. Your minimum due is ~$110, where you are paying $100 / mo for only interest and ~$10 / mo to cover your balance.
If minimum is all you can pay with your current cash flow - yes, pleease do a balance transfer.
Assuming your transfer cost is 3% and 0% interest for 21 months ( as many CCs do now ) your cost will be $150, but paying off $110 / month for 21 months you will pay off roughly $2000 off your balance, instead of ~$210 if you were paying only your minimum due. After 21 months - you'll have a balance of ~$3000 ( instead of $4800 ) and then you can repeat.
If your cash flow gets better - please make as many more / bigger payments any time you can to reduce the balance and you'll pay off sooner.