This article gives a brief explanation of what a balance transfer credit card is and how to find balance transfer programmes.
Balance transfer credit card offers are a popular way to move a balance from one credit card to another. The main reason someone would do a balance transfer is to get a credit card with a lower interest rate than the one they already have. Balance transfers aren't too hard to do, as long as you find a credit card with a balance transfer programme that lets you join at a lower rate than your current company. Before you start the process and "join the wave," there are a few important things you should know about balance transfers.
What is a Transfer of Balance?
Balance transfers are a simple method that many people use to get the best possible interest rate. To do a credit card balance transfer, you have to take the balance on your current credit card and put it on a balance transfer credit card programme with a competing credit card company. Even though many credit card companies offer attractive balance transfer credit cards, it's important to remember that before you start the process, you should make sure you can do a balance transfer and lock in a low rate. If you have a low credit score, you might not be able to get a balance transfer credit card from a credit card company until your score goes up.
What happens to your credit score when you transfer a balance?
Whether you think it's fair or not, if you switch from one balance transfer credit card programme to the next often, you won't go unnoticed. Credit card companies will eventually figure out that you move around a lot and will lower your credit score and raise the rate you can get. So, if you use balance transfer credit cards over and over again, you run the risk of hurting your credit score in the long run. Credit card companies will be wary of people who have a history of transferring balances. To make sure they don't lose money by taking you on as a customer, they may lock you into a higher interest rate.
Why You Shouldn't Do a Balance Transfer
Balance transfers are not a good idea if you are locked into a good interest rate with your current credit card company. Like any other balance transfer, a credit card balance transfer will probably close your account with your old credit card company and force you to work with a new one. After the trial period with low interest rates, that new company may raise your rates to a higher level than your old company. Before you do a balance transfer, you should read the fine print on the company's website.
When you find a balance transfer credit card with a low interest rate and other perks to get you to switch, it can feel like you've found a pot of gold. But whenever you do a balance transfer, it's important to do a lot of research on what the new credit card has to offer. There's a good chance that any business that offers credit cards with balance transfers is using the tried-and-true credit card balance transfer strategy to get a lot of customers quickly. Learn about your balance transfer options so you can make a decision that is right for you.
