- Charging some purchases to a card, and doing so wisely, can actually improve your credit score…
Balance transfer cards offer a way to reduce your debt by transferring your balance from one card to another with a lower interest rate. This can save you money on interest payments and help you pay off your debt faster. The best balance transfer cards offer 0 percent interest rates for a set period, which can be helpful if you are trying to pay down a large debt.
A low-interest rate is set for a designated time, usually between 6 and 18 months. Some offer even longer low-interest periods. This allows cardholders to move their existing credit card balances onto the new balance transfer card, saving them money on interest payments. No matter how high your debt is, a lower interest rate will make a big difference in your budget.
To use a balance transfer card to reduce your debt, first find a card that offers a 0 percent interest rate for the desired amount of time. Next, calculate how much you will need to pay each month to pay off your debt within that time frame. You can use a balance transfer calculator to help figure this out. Then, transfer your balance to the new card and make those monthly payments. Using a balance transfer card correctly can save money on interest payments and get rid of your debt faster. Make sure you pay off your entire balance before the promotional period ends, or you’ll start paying interest at the regular rate.
What should I know before using a balance transfer card?
The goal of a balance transfer card is to reduce the interest you are currently paying on your credit card debt, not new purchases. When you make a new purchase with your balance transfer card, you are charged interest on that purchase from the day the purchase is made. This can offset any savings you may have achieved by transferring your balance to a low-interest card.
If you have a balance transfer card, make your monthly payments on time, or you’ll end up paying more in fees. Most balance transfer cards charge a fee for the amount transferred each month that the payment is late. So, if you transfer a $1,000 balance and don’t make your monthly payment on time, you’ll end up paying an extra $30 to 50 in fees.
How do I apply for a balance transfer credit card?
Once you have chosen a card with the lowest balance transfer rate and been approved, simply follow the instructions on how to complete the transfer. Be sure to note the deadline for completing the transfer, as missing it could result in costly penalties. Also, keep in mind that not all debts are eligible for transfers—typically, only those carried on credit cards are eligible. Mortgages and other types of loans cannot be transferred using this method. Once you’re approved for the new card, you can simply call your current credit card issuer and ask them to move your balance over. They should be able to do this within a few business days. Make sure you continue making payments on your old card until the balance has been transferred.
Balance transfer cards can be an essential tool for reducing debt when used correctly. However, it’s important to be aware of the fees and guidelines associated with these cards and to use them only as a short-term solution.
Hits: 0
