Is a credit card with a balance transfer your way out of credit card debt? It might be. If you're having trouble paying off a high balance and the high interest that comes with it, a balance transfer credit card could be the right solution for you. But before you fill out an application, you should think about a few things. Learn about the process of transferring a balance, and you'll get the most out of your credit card.
What Credit Cards Can You Transfer Your Balance To?
Balance transfer credit cards are appealing in a way that makes them stand out from other kinds of plastic. They give people the chance to move a balance from a card with a high interest rate to one with a low interest rate. In fact, most balance transfer cards have the first few months with no interest. This means that you can make payments that go right toward paying off the debt. As you pay down your debt, you can save hundreds of dollars in interest costs.
How to Compare Credit Cards That Let You Transfer a Balance
Even though many balance transfer credit cards look the same, they are actually quite different. As you look at the options, check the following details:
Length of the introductory period: The first period with no interest can last anywhere from three to fifteen months. If you try to get 0% interest for at least 12 months, you'll have plenty of time to pay off the balance.
What is included in the 0% APR - Some credit cards only offer 0% APR on the balance when you transfer it to another card. This means that when you buy something, you will have to pay more in interest. Also, any payments you send will go first to the balance and then to the purchases. As you pay down the balance, the new purchases and the high interest rates that come with them will show up on your statements and keep adding up. With high interest, you might end up paying more than you planned. To avoid this, look for a card with a 0% APR on both purchases and balances. Or, you can limit how much you can use your card until you pay off the balance you moved.
Check the fees. Most credit cards with balance transfers charge an initial fee for bringing the new balance over. This is sometimes a certain percent of the amount of the balance. Balance transfer fees are often capped at a certain amount, like $50 or $75, by banks. The money you save on interest usually makes up for this cost.
Balance transfer cards give you the chance to pay off debts that have been bothering you, but many of them also have other benefits. Some credit cards that let you transfer a balance also have a rewards programme. After the introductory period, others start charging a low interest rate. Before you apply, think about the long term. Think about what you'll want once you're out of debt.
Using a Balance Transfer Card
Balance transfer credit cards can be a good solution if they are used right. After you know how much you owe, you should think about making a plan to pay it off. Put money aside each month to pay your credit cards. If you can, pay off the balance before the beginning period is over. As the balance goes down, you'll get a better handle on your money. You will also start building a better credit history. After the balance is paid off, you can use the card's other features.
