Balance transfer credit cards could be just what you need to pay down your credit card debt if you already owe money on your cards. In other ways, they can also help you save money. Here are a few ways that a credit card balance transfer can save you money.
0 percent APR Interest
The first way it can save you money is if the new card gives you an introductory offer for balance transfers with 0% APR interest. To be sure that this rate applies to balance transfers, you will need to read the fine print on the credit card. Most of the time, it affects the interest rate on your purchases, but on some cards, it also affects the interest rate on your transfers. If you also get that interest rate on your transfers, be sure to keep track of how long you get that rate. The length of the introductory offer is often not the same as the rate on balance transfers.
Most purchases you make during the introductory period will have interest rates of 0% APR. This saves you a lot of money over that time period, but to get the best savings, make sure to pay off the balance each month and on time. If you are late, you will lose any savings you made, and you may end up paying more than if you had bought the item at full price.
Fees for transferring money
You should also check to see if there are any fees involved with the transfers. Some balance transfer credit cards will charge up to 4% of the amount you transfer to the card as a fee. Compared to the interest on the other card, this number may sound good, but keep in mind that many cards don't charge anything.
Rewards
Choose your balance transfer credit card based on this option as well, since if you get the right card, you can save money here. There are many kinds of rewards, but if you get one that fits your needs (what you spend the most on each month), you can probably save a lot of money. When you use a card that gives you rewards, you get discounts on future purchases, rebates, or cash back. This amount of money saved can add up over time and make you happy when you get your bill each month.
Compare a few different balance transfer credit cards to see what kinds of deals are out there. Also, check out the different fees so you don't lose the value of your rewards. A credit card can have a lot of fees, but if you look around, you might find one with fewer fees or fees that you can avoid by paying on time and in full. Get the lowest possible interest rate for the time after the introductory period is over, or get a new card.
