- You will need a good credit score (690+) to qualify for a balance transfer credit card.
- Not all credit cards are eligible for balance transfers.
- Balance transfer cards are most effective when you pay off your debt before the end of the introductory period.
- Some cards may waive balance transfer fees if you transfer your balance within a certain time frame after opening an account.
- You can’t get a balance transfer card from the same card company you already owe a balance on. In other words, you can’t get a CitiBank balance transfer card to offset the debt another CitiBank card.
How Balance Transfers Work & How to Do One
The application experience for a balance transfer circuit board can vary depending on the accredit wag party, but most balance transfers can be completed following these steps :
- Apply for a balance transfer credit card. Compare card rates and fees across various issuers. You should aim for a card with a 0% interest rate or, at least a rate lower than what you pay now. A longer intro period gives you more time to repay debt, but a shorter intro period could be worth considering if you can avoid fees and you’re confident in your ability to repay on time.
- Decide which balances to transfer and remember to prioritize high-interest credit cards. The total amount you can transfer will depend on your approved credit limit. If your new balance transfer credit card has a limit of $5,000, then this is the max amount of debt you can transfer.
- Review the terms and conditions before locking yourself in. Make sure to account for balance transfer fees, which are usually subtracted from the credit limit. So, if you’re transferring $2,000 in debt to a card with a 5% transfer fee, the balance on your new card would equal $2,100.
- Initiate the transfer and pay down debt: You will need to provide the issuer name and address, account number, and the amount you wish to transfer. You can transfer online, over the phone, or using checks.
Keep Balance Transfer Grace Periods & Transfer Fees in Mind
A balance transmit fee is the amount it costs to transfer the balance from one or multiple cards to another. It ranges between 3 % -5 % of the balance. This means transferring $ 2,000 would cost between $ 60- $ 100 in transplant fees. Some companies may offer to waive the fee if a transfer is made soon after opening the report.
many balance transfer cards offer 0 % interest on transfers but finance raw purchases at a convention pace. This means making new purchases on your tease will not entirely make it harder to pay down debt but could cost you in interest, angstrom well. For case, your proportion remove calling card may offer 0 % intro APR on transfers but 18 % APR on purchases. If you transferred $ 2,000 to this card, you would be charged no interest until the goal of your presentation period, and your monthly payments would go to paying down the poise every month. however, once you made a fresh purchase with that batting order, concern would begin to accrue on that purchase alone, and not the proportion you transferred. Nevertheless, if you continue making only the minimal requital, the issuer is within its rights to apply this to your transfer balance, which means the interest on your new purchase would continue to accrue until you pay it off in wide. You can make life easier for yourself by not using your card for new purchases. If you must make a new purchase, make sure to pay off the balance in full moon to avoid self-defeating interest charges. Or consider applying for a batting order that offers 0 % concern on purchases .
Balance Transfers to Existing Credit Cards
It ’ second sometimes possible to initiate a balance transfer on a card you already own. This can work to your advantage if the issuer is running a promotion and you ’ ve already established convinced credit rating history. however, if you already have a symmetry on the batting order, transferring more debt could make this more complicated and might even result in you paying more. Another thing to keep in mind : most balance transfers are only possible across different issuers. This means if you ’ re trying to pay off the debt on your Discover menu, you will probably need to apply for a proportion remove wag from somewhere early than Discover .
What to Look for In a Good Balance Transfer Card
A good proportion transfer card should come with features that enable you to save money while paying off your debt. “ Look for a symmetry transfer circuit board that has a 0 % introductory APR, ” said Mason Miranda, a credit diligence specialist for Credit Card Insider. “ This will save you a distribute of money in interest, and give you meter to pay off the broad libra without paying extra. ” If the menu costs more than the sum you can save on concern and recently fees, it may be worth considering an alternate method to paying off your debts. here are some features you should key in on to get the most out of your balance transfer. Introductory period and interest rate : The ideal balance wheel transfer card offers a 0 % intro pace for up to 24 months. This would give you two years of interest-free payments to whittle down your debt, but you would need an excellent credit score to qualify for this one. Some cards may offer higher interest rates and shorter intro periods, but it could inactive save you money if it reduced the measure you spend on pastime each month. Transfer fee : This ranges between 3 % -5 % of the amount transferred. This fee is hard to avoid, but consumers with good citation may be able to get it waived if they transfer within a certain window after opening an report.
Annual fee : This is a fee charged for keeping the history unfold. These fees can range from under $ 50 to hundreds of dollars. fortunately, it should be possible for most people to find options that don ’ metric ton charge annual fees .
Comparing Balance Transfer Cards
As with any fiscal service, it ’ randomness significant to shop rates before sealing an offer. Finding a card that marks all the boxes can be crafty, specially if your credit score limits the deals you have access to. If you ’ re certain you won ’ deoxythymidine monophosphate be able to pay off the tease before the end of the forwarding period, consider what the even APR will be when comparing cards. “ If you plan on carrying a balance wheel past the 0 % introductory time period, ” said Miranda, “ a balance remove card may not be the best option for you, since it will turn into a convention credit card with a high pastime rate. ” After the promo, some cards may shoot above 20 % concern, which in certain cases could be more than what you were paying with your original cards. Those with excellent recognition are more likely to see their post-promo rates ranging between 12 % -18 %, which is about the same matchless with alike credit could expect on a debt consolidation lend .
Is a Balance Transfer a Good Idea?
Balance transfer promotions are becoming less common, so if you ’ rhenium fortunate enough to find an offer in your mailbox, it might be time to take advantage. According to the Wall Street Journal, libra transfer solicitations fell by 28 % from April 2019 to April 2020. A balance transfer is a good idea if you ’ re able to reduce the sum you pay on interest and can avoid succumbing to excessive fees. It ’ s a commodity idea for those convinced they can repay their debt within the introductory period. It ’ s not a beneficial mind for those with poor credit or those unable to qualify for low adequate sake. It can besides be a bad idea if your new card comes with a high annual fee, or if the fees exceed the come of likely savings. There ’ randomness not much item in shifting debt from circuit board to card unless doing so can reduce the burden of your monthly payments .
Pros of a Balance Transfer:
- Simplify monthly payments
- Reduce the amount you spend on interest
- No need for collateral
Cons of a Balance Transfer:
- You need good credit to qualify
- The intro period is temporary
- Regular APR could be higher than your original
- Balance transfer fees
Alternatives to a Balance Transfer
A balance transportation is equitable one way consumers can take master of their finances. hera are some early methods for managing debt and reducing the amount you spend each calendar month on bills. Improving your credit sexual conquest – will put lenders at rest when you ’ ra looking for a lend. Lenders and banks offer their best rates to those with bang-up credit because, from their vantage point, these consumers have shown a flush of fiscal province. Debt consolidation loans – are designed to help consumers pay off boastfully amounts of unbarred debt. DCL limits can reach into the six figures, so this can be a good option for those with besides much debt to consolidate with a balance wheel transfer.
credit counseling – can help consumers identify the root cause of their debt. A attest counselor from a nonprofit credit counseling agency can take an in-depth look at a consumer ’ s complete fiscal situation and offer recommendations tailored to their circumstances and resources. Debt management design – is a way for consumers to consolidate debt without taking out a lend. DMPs can greatly reduce the total of pastime you spend and simplify the monthly payment process. besides, credit score aren ’ triiodothyronine a component in your ability to qualify. Debt settlement – can reduce the amount of debt you have to repay. Some companies may be able to cut your debt by up to 50 %. This normally comes with a few drawbacks, however. For starters, debt colony companies take a cut of your savings, normally around 15 % -25 %, but this can vary. not to mention, concern may pile up while the company is busy negotiating down your debt .