How To Choose A Balance Transfer Credit Card
Balance transfer card is definitely the best credit card for reducing your debt. Such a card allows to consolidate your high-rates loans and credit cards and pay off the balance at a lower interest rate or even 0 interest rate during a limited introductory period.
Though balance transfer is a good way to save money, you should be careful, as you are most likely not to get approved for a balance transfer card with bad credit history. Your credit score must be good or excellent. Otherwise you’d better consider credit cards for bad credit or personal loans.
When choosing a card for balance transfer, be on guard. Do not forget about your benefits (after all, this is your goal). There are some important details you should pay attention to:
- The amount of transfer. First of all, it is necessary to understand that only the amount not exceeding the new approved credit limit can be transferred. For example, if your current balance is about $3,500 and you have been approved for a new balance transfer credit card with a limit of $3,000, it will be possible to transfer no more than $3,000.
- Balance transfer fee. Remember that not all balance transfer credit cards presuppose $0 balance transfer fee. Some issuers may charge you just for the fact of balance transfer. As a rule, it is about 2% to 5% of the transferred balance. Nevertheless, cards with no balance transfer fee exist, so don’t miss the chance to save on this!
- Period for balance transfers. Clarify how long the 0% or low interest rate period for balance transfers lasts. It is also important to know in what time period you should accomplish all the transfers. Usually it is limited to 1-2 months. Then you will have to pay extra fee.
- The creditor. The main rule is that balance transfers between the same issuer’s cards are forbidden. Therefore, don’t forget to check both cards: the one you want to transfer from and the one you want to transfer to.
- Intro APR on purchases. Of course, now your main goal is to pay off the already existing debt, and not to create a new one. However, if you are going to use the card in the long run, you should be extremely attentive and choose one with lower fees. Most of balance transfer cards have promotional period and demand 0% intro APR for purchases.
- Ongoing APR. Intro APR offers may be great, especially if they are 0%, but it is not less important to get acquainted with the interest rate that will apply after the introductory period expires. Find out whether it is variable and depends on your credit worthiness or not. Compare different offers. Without a doubt, it is much more pleasant to use a card with lower rates.
- Annual fee. In addition to APR, issuers may also set up a fee for membership. Beware of it! With a high probability it will lead you to digging yourself even deeper.
- Foreign transaction fees. No one knows where you are going to be tomorrow. So, you had better know if there is a fee for transactions made abroad and transactions in foreign currency.
- Penalty for missing a payment. Are you completely sure you will always make payments on time, without any delays? If so, just skip this item. However, you never know what may happen. Therefore, it will still be better to get acquainted with the penalty for a payment missed. Moreover, a missed payment may lead to a loss of 0% APR.
- Rewards program. Again, in case you plan to continue using the balance transfer card after paying off your debts, be sure to check out available bonuses in advance. Fortunately, many issuers are ready to offer worth-while rewards programs, e.g. cash backs or bonus miles.
Now that you have become an expert in balance transfer credit cards, it remains only to look at the best balance transfer offers and choose the right one.
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