Question for the Money Doctors

Question submitted on Dec 17, 2022.

Question

In 2023, I will be looking to purchase a home. I've paid off my credit card debt with the exception of 1 department store card. I would like to open and transfer that balance to a zero interest card. Is that a smart choice? I'm thinking it would help me pay off faster but I don't want to mess up my credit score and not sure if it will look good to a mortgage company that I just opened a new account. What should I do?

Answer

Good luck with purchasing a home!    If the current credit card has a high interest rate, it may make sense to transfer the balance to a lower interest rate.   However, I am not aware of any zero interest cards right now.   Please beware of the fee for the balance transfer.  The fee could be just as high as the interest rate on your current card.  Not only should you pay off your debt, but you also need to build up your down payment for the purchase of the home.   It would be a good idea to get prequalified for a mortgage so you can understand how much it would cost to own a home.

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