A $10,000 lesson on why credit card balance transfers are stupid

John Cook
John Cook
Aug 26, 2018 · 3 min read

Today I made my last and final payment to Chase credit cards and officially paid off $10,267. My excitement is depicted below.

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Suck it Chase!

The story of this debt journey began in August 2017 when I thought it would be a fantastic idea to do a credit card balance transfer from Bank of America to Chase. The illusion of debt consolidation or balance transfers as a means to manage debt is just that -an illusion.

Balance Transfers don’t do anything. You’re still broke. I was still broke.

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The borrower is slave to lender — x2.

Immediately after the balance transfer, I sighed with relief thinking that I made meaningful progress in my debt freedom journey. When the reality is that 0 net progress had been made. So what did I do? Make minimum payments for almost 12 months! In fact I didn’t step it into high gear until the last 5 months. Literally 98% of the debt was paid off in Spring/Summer 2018.

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Intentionality is the only way out of debt.

My Conclusion is that a balance transfer will not make a meaningful impact in your debt payoff journey. It certainly didn’t in mine. What made the most impact was the desire and focus to get out of credit card debt.

If I were going to keep the debt for 30 years (lord please no) then yes, the balance transfer and interest rates matter. Interest rates become a huge problem.

The big problem with balance transfers is I felt like I actually did something. This made me take my eye off the ball with be less than laser focused. That’s 98% of getting out of debt. Two percent of getting out of debt is interest rate.

My steps to paying off this debt were super simple and largely unscientific. I didn’t spend too much time weighing the pro/cons because my goal was to pay off in < 12 months. Ready for the tips?

1 — I lived on 50% of my take home income of the 4 months leading up to the 0 balance.
2 — I created a written budget, and followed it to the penny.
3 — I had plastic surgery and cut up my credit cards, swearing never to use it again.

Sorry if you were expecting an exciting journey filled with bitcoin investments and finding hidden gold in my attic. I don’t even have an attic. There aren’t any attics in San Francisco! They’re all converted lofts that are rented out for $4,000/month…but that’s another story.

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