What's In This Article?
You have received the offers in the mail. You have come across the offers online. Balance transfer credit cards are everywhere. With hundreds to consider, you’ll likely be able to find one that suits your financial needs.
If you currently have credit card debt, you may be able to use a balance transfer credit card to improve your situation.
Your goal is simple: transfer debt from a high-interest credit card to one with a 0 percent balance transfer APR period. By doing this, you avoid interest payments for a predetermined length of time, often as long as 18 months.
If you find yourself considering this transfer strategy, you should learn as much about the process as possible.
There are five basic steps to follow:
1. Make a note of all current credit card debt.
2. Make a note of the interest you are paying on each credit card.
3. Find a balance transfer credit card for which you can qualify.
4. Learn about the fees and benefits of the credit card, including the duration of the 0 percent period.
5. Transfer all your debt to a single credit card.
By following these five steps, you can make an informed and confident decision that will immediately improve your finances.
Balance Transfer Tips
Before you decide in favor of a balance transfer credit card, here are seven tips to consider:
1. A balance transfer is not the same thing as repaying your debt.
While there are benefits of making this move, such as the ability to avoid interest payments, you are not eliminating your debt. You still have to pay back the balance.
As the name suggests, a balance transfer is nothing more than the transfer of debt from one credit card to another.
2. A balance transfer credit card can simplify your life.
Over time, many people find themselves bogged down with multiple credit cards. Not only does this mean multiple payments every month, but it also results in more money paid in interest.
Once you transfer all your balances to one card, the multiple card stress goes out the window. Now, you have one monthly payment. Better yet, you will not have to pay interest on the balance until the 0 percent period expires.
3. Don’t stop at credit cards.
Did you know that you can transfer other types of debt to a balance transfer credit card? Think along the lines of car loans, store credit cards, and any other monthly installment payments.
Condensing your debt is not always the best decision, but it’s an idea to consider if you have high-interest payments.
4. Fees, fees, and more fees.
You don’t want to apply for a balance transfer credit card until you are 100 percent familiar with the costs associated with doing so.
Even though it can be beneficial in the long run, most balance transfer credit cards have some fees associated with them.
For example, a balance transfer fee is among the most common. This fee is based on a percentage of the balance you are transferring.
Note: a typical fee is somewhere in the two to three percent range. So, if you are transferring $10,000, you will pay anywhere from $200 to $300 to start.
Are you okay with the idea that you will pay fees upfront to save money down the road? Compare the fees to the long term cost savings to determine if making a transfer would be in your best interest.
5. Your transfer rate will not last forever.
When applying for a balance transfer credit card, it’s easy to get excited about a 0 percent transfer rate that lasts for 18 months.
Although you won’t pay interest during this time, the 0% rate will end. Do everything you can to pay your balance down. If you still have a balance when it expires, your credit card will revert to the standard APR. At that point, you will once again be paying interest on your balance.
6. Good credit helps.
You don’t need amazing credit to qualify for a balance transfer credit card, but it will definitely help. In today’s day and age, most credit card companies only offer these cards to people with good to excellent credit.
If your credit is less impressive than you’d like, don’t give up just yet. Exhaust all your options before considering other strategies.
7. Don’t get caught in the “repeat transfer” cycle.
Are you hoping to execute another balance transfer once the introductory rate expires? This repeat transfer is not always a good idea. Not only are lenders wise to this, but it can harm your credit score.
If you have yet to consider the benefits of a balance transfer credit card, now may be the time to do so.
Just because you learn more about this type of offer does not mean you have to move forward. If everything checks out, you can then apply for a balance transfer credit card that suits your financial circumstances.
Our Top Recommendations
U.S. Bank Visa® Platinum Card
The card offers 0% introductory APR for 20 billing cycles on purchases and balance transfers, giving cardholders plenty of time to pay their debts without any interest. With U.S. Bank Visa® Platinum Card, you can pick your own due date. This allows you to schedule debt payment at your convenience.
BankAmericard® credit card
This credit card is a good alternative for those people seeking breathing room to trim high-interest credit card debt. The BankAmericard® credit card comes with an introductory APR of 0% for 18 billing cycles on purchases and any balance transfer made within 60 days of account opening. Also, there’s the current APR of 12.99% – 22.99% Variable APR.
Other Types of Credit Cards
Interested in other types of credit cards? Check out these links for more information.