By offering 0% introductory rates on balance transfers, balance transfer credit cards can help you pay off credit card debts faster and save a lot of bucks in terms of paying no interest toward monthly payments. Since balance transfer credit cards are promoted as a great tool for those struggling with a huge debt, the article will dig deeper into what is a balance transfer, and how it works.
What Is a Balance Transfer?
A balance transfer is a credit card transaction that allows consumers to transfer debt from one card with a higher interest rate to another with a lower or 0% interest rate. Credit card balance transfer sounds like a great opportunity for consumers who need to pay credit card debt with a high-interest rate. A balance transfer transaction can save a big deal of bucks on interest when conducted strategically. For instance, a balance moved to a credit card with 0% APR could be paid easily without paying a single penny towards interest.
Balance transfer credit cards usually come with particular limitations and terms that a consumer should understand and abide by to prevent any additional fees or finance charges.
How does a balance transfer work?
The process of credit card balance transfer can vary. Hence, below are some basic steps you may need to take when trying to transfer balance between credit cards.
- In order to make a balance transfer transaction work for you, you should apply for a balance transfer credit card with a 0% APR promotion on balance transfers. Having good credit scores can help you avail best offers and lower interest rates. You may also need to apply for a credit card from another company to carry out a balance transfer transaction successfully as the same issuers generally don’t allow for such transactions.
- Before you start the balance transfer transaction, you may need to provide details about your debt or balance like the name of the issuer, account information and amount of the balance, etc. you are about to transfer to a new card. Before getting started, you should go through all the terms and conditions to ensure you will be able to pay off debt instead of building more debt.
- Once all the necessary details are provided and the transfer transaction is approved, wait for the transfer to complete. It may take two weeks or longer to accomplish. You should be patient and wait for the confirmation notification.
- When the transfer balance has successfully been added to your new card, you need to make monthly payments in full to pay off the balance as soon as possible before the 0% APR period ends. If you fail to pay the balance during the introductory 0% APR, you may need to pay a high-interest rate even higher than your old card.
Should I do a credit card balance transfer?
If you can easily manage to pay off the transferred balance within the introductory 0% APR period, you should get a balance transfer credit card to pay off debt faster without paying bucks towards interest. If you want a higher limit and are comfortable with paying some interest on monthly payments, applying for a personal loan would be a great idea for you instead of getting a balance transfer card.
Performing a balance transfer is a most valuable option for those who need months to pay off high interest credit card debt. Good credit history can make an impact on your credit card application or interest rates as companies are more likely to offer 0% APR periods to consumers with good credit. A credit card designed for balance transfer can save you a big deal of money and help eliminate debt faster on good terms. However, one should be able to make monthly payments on time to pay off debt instead of building more debt. Reading all the terms and conditions carefully is also a good idea to avoid any hidden or high financial charges.