Life as an adult comes with a truckload of responsibilities and plenty of bills to pay. A vast number of individuals resort to taking loans with high-interest rates to offset pressing bills while getting into deeper financial crises.
Paying off a high-interest rate loan can be a bit of a challenge for many people. The quest to find a way out becomes a consuming thought.
Balance transfer might just be the way out. A balance transfer involves the transfer of debt from one credit card to another with a lesser interest rate.
Important notes about balance transfers:
The process of balance transfer begins with the application for a new credit card with 0% APR. This process usually takes a while before approval. During the wait, you must know your account number and the amount you intend to transfer.
The credit card issuer has the option to either place a transfer limit on your card or approve of a full transfer. This can also be determined by other factors such as the issuer’s transfer limit as well as your credit limit.
Depending on the card issuer, you either pay your debt through the use of a balance transfer check, or your card issuer makes the payment on your behalf.
As easy as this may sound, a balance transfer is not a quick fix. This process often takes weeks or a couple of months to be successful. It also entails that you pay a certain amount of money monthly into your new credit card.
Your ability to follow through on this payment greatly improves your credit card balance transfer credit score. Failure to comply puts you at risk of incurring more debt.
Balance transfer helps you cut down the interest rate on your existing card. You also get bonuses when you adhere to the rules guiding this process. The importance of a good credit card score can never be overemphasized.
For one reason or the other, you might be wondering, can you transfer someone else’s credit card balance to yours? The answer is yes. Although this might be a risky move to make, some card issuers make this option available. However, this comes with certain conditions that must be met.
Getting a new credit card can be a good way to pay off debt with no interest. However, this can also get you into more debt if you aren’t careful.
Generally, having more than one credit card affects your credit score. Balance transfers to an existing credit card affect credit scores as well. Since the goal is to get out of debt as quickly as possible, you need to decide on which option helps you achieve this.
Once you’ve completed your debt payment, it is advisable to retain your high-interest rate card but only to be used when necessary. Bear in mind that closing this card will also affect your credit scores.
Nevertheless, if you find yourself unable to get a grip over your spending rate, then it’s best to close it.
There are several good balance transfer cards made available by card issuers tailored to meet the needs of each individual.
Most balance transfer cards offer 0% APR on credit cards. This serves as a good way to pay off principal debt rather than spending a large chunk of money on interest payments.
Before you decide on which balance transfer card to opt for, first consider the balance transfer fee, the amount you intend to transfer, and how long it would take to pay off.
The transfer fee for most balance transfer cards ranges between 3-5% of your balance. Although this is not common, a few balance transfer cards come with a 0% transfer fee.
Therefore, a good balance transfer card offers:
If you are trying to pay off debt on one credit card within a short period, then a balance transfer might be the best option. This would also require that you have a good credit score and your credit balance is minimal.
A balance transfer should be a tool to get out of debt quickly. Consider your financial needs, credit score, and the package each card has to offer.
A balance transfer should be paid off within the stipulated time frame. Failure to do so can attract a high APR penalty charge of over 20%.
Seek out means other than a balance transfer if you have a poor credit score with multiple credit cards.
As mentioned earlier, a balance transfer is not a quick fix and not as easy as it may sound. To ensure that you apply this tool correctly, below are some money-saving credit card transfer tips.