A balance transfer credit card can help you pay off debt on high interest rate credit cards, but only if you choose the right credit card. Balance transfers can be expensive if they are not completed correctly or are done using expensive credit cards. Before you transfer your balance or even apply for a balance transfer credit card, make sure you are comparing credit cards to choose the best one.
Many balance transfer credit cards have a low or 0% introductory interest rate for balance transfers.
The introductory interest rate will reduce or eliminate the monthly financing cost of your balance transfer over a period of time. A lack of a financial account makes it easy for you to pay off your credit card balance. The 0% interest rate is ideal, but the low interest rate – 2.99% – is also good.
By law, promotional interest rates have to last for at least six months, but some credit cards offer introductory rates of up to 18 and even 21 months. The longer the introductory period, the better it gives you more time to pay off your balance without any interest.
When the introductory period expires, you pay interest at the regular transfer rate (which is sometimes the same as the purchase rate). You do not want to end up paying high interest after the end of the promotional period, especially if the promotional period is not long enough to pay for the entire transfer.
Many credit cards offer the same introductory rate for your purchases and balance transfers, which makes the offer even more attractive. However, an introductory purchase rate could work against you. If you incur expenses on the card because there is a promotional rate, you are working against any attempt to pay off the balance transfer.
Balance transfer fee
Balance transfer fees are usually 3% to 5% of the amount you transferred or a minimum of $ 5. The higher the amount beaten, the higher the fee. What is important is that the balance transfer fee does not negate the interest savings you receive by moving your balance. If you find a credit card that does not charge a balance transfer fee, consider it strongly.
Whether you qualify
Do not assume this because you are getting a 0% rate bid that you will approve. Credit card issuers send massive pre-approved offers to consumers who meet certain basic criteria. When you apply, your card issuer will take a deeper look at your credit history, income, and other factors to decide if you are eligible. There is a chance that you may not qualify for a low interest rate transfer at the end. Generally, the better your credit history, the more likely you are to qualify for a balance transfer offer.
Some balance transfer credit cards require you to transfer your balance within a specific timeframe, such as 60 days of account opening, to receive a promotional rate. If for some reason you are not ready to transfer your balance immediately, you should wait to apply for a card or select a credit card that does not require you to make a transfer in advance.
Credit card issuer
You usually cannot transfer balance between credit cards owned by the same company. So while looking at credit cards for balance transfers, exclude cards issued by the same lender as the balance you want to transfer.