How Balance Transfer Credit Cards Work and What You Need to Know
Paying off credit card balances is usually challenging, and a high-interest rate makes this even more difficult to do. High credit card balances are one of the top reasons consumers file for bankruptcy. However, for those struggling with burdensome credit card payments, bankruptcy is not the only option available. Using balance transfer credit cards strategically may provide some relief for your current financial challenges and help you to get back on track. Compare the best credit cards for balance transfers and see which one you qualify for.
How to Complete a Balance Transfer
Making a credit card balance transfer is easy to do. First, you must find the right credit card to use for this process. Some consumers have another credit card in their possession with a great transfer offer linked to it. Contact your credit card companies today to inquire about balance transfer offers available to you. If you do not have another credit card available to transfer a balance to, look for companies today to inquire about balance transfer offers.
The best balance transfer credit cards have minimal transfer fees and a lengthy promotional interest rate. For example, some of the best credit cards for balance transfers waive the transfer fee and have a 0 percent interest credit card rate for the first 12 months. The Internet is a great resource to use when searching for a credit card with a promotional offer on a balance transfer.
Transfer Credit Cards Over the Phone to New Balance Transfer Credit Cards
After you find the credit card, you want to transfer your current outstanding balance. Open a new account only if necessary. Gather the transfer details from your current credit card company. This includes the total amount of debt to transfer as well as the credit card account number. Call the new credit card company directly to initiate the transfer. The new credit card company will ask for the amount to transfer and the credit card number over the phone. The entire process will be completed within minutes. However, the settlement of funds usually takes a few days. After a few days, contact your old credit card company to ensure the completion of the process.
What You Need to Know About Balance Transfers
As you can see, using credit cards for balance transfers is a simple, straightforward process that often provides many benefits. Before you move forward with this plan, however, learn as much as possible about it. While a balance transfer is ideal for many consumers, it is not ideal for all situations. These are some of the most important facts to keep in mind before searching for the best credit cards for balance transfers.
1. How Balance Transfer Credit Cards Benefit You
Using balance transfer credit cards strategically can reposition your finances with incredible benefits. For example, transferring your outstanding balance to an account with a lower interest rate yields lower monthly payments. When individuals are struggling to make minimum monthly payments, lower payments are critical for financial management. Because some balance transfer credit cards have very low-interest rates or no interest rate at all for a defined period, debt reduction. Some consumers eliminate their entire credit card balance during this time.
However, avoid taking on new credit card debt during this time. Some consumers charge new balances to their high-interest credit cards after completing a transfer, and this compounds their debt situation.
Another benefit is the ability to consolidate credit card debts. If you have two or more high-interest rate credit cards, consider consolidating the accounts into a single account with a lower interest rate. Keeping up with payments on multiple credit cards yields easier financial management.
2. Compare Balance Transfer Offers and Find the Best Credit Cards for Balance Transfers
If you want to take full advantage of balance transfer credit cards, you need to find the best credit cards for balance transfers available to you. First, find credit cards for balance transfers that meet your needs based on credit limit or transfer limit. The best credit cards for balance transfers enable you to consolidate all of your debts into a single account with a low-interest rate. Second, compare interest rates between various offers. A lower interest rate is ideal, but ensure that you qualify for the advertised promotional rate. Third, compare the promotional term. In some cases, it is better to take a slightly higher interest rate over a longer promotional time than to choose the lowest rate that extends over only a few months.
Keep in mind the length of time it will take for you to pay off your debt when selecting a promotional term. A final point to focus on is the transfer fee. Some accounts have a very low, fixed transfer fee, or the fee is waived altogether. Other accounts have a fee based on a percentage of the total amount transferred. The structure that is most affordable depends on the sum of money you intend to transfer.
3. What You Need to Qualify for the Best Balance Transfer Credit Cards
Through your search for the best balance transfer credit cards available, you likely discovered a broad range of promotional offers to choose from. Interest rates and terms for balance transfer credit cards are usually dependent on your credit score. Before you apply for a new credit card balance transfer account, request a free copy of your credit report. The three credit bureaus provide consumers with one free copy of their report each year. Review your credit report so that you can reasonably estimate what type of offer you should qualify for.
For consumers using an existing credit card account for a transfer, your credit card company likely has pre-existing offers for you to choose from. Simply calling the credit card company directly and inquiring about promotional credit card balance transfer offers is productive.
4. Repeat Balance Transfers Can Damage Your Credit Rating
Some consumers plan to use balance transfer credit cards repeatedly to maximize their benefits. For example, you may apply for new balance transfer credit cards today and transfer funds. After the expiration date for the promotional period on this new card expires, you decide to transfer the funds back to your previous credit card to take advantage of an offer that company offers.
This type of activity yields the lowest interest rates and monthly payments possible until debt repayment is completed. However, it also usually results in a ding to your credit rating. Before you make repeat balance transfers, be aware of the impact that your actions could have on your credit score. Understand that credit ratings affect insurance rates, loan rates, your ability to get a new job and many other factors in your life.
5. Use Balance Transfer Offers for Other Expenses
Some consumers have significant costs, and credit card payments are only one component. For example, medical bills are common among consumers, and a serious illness or injury can cause these bills to mount. Medical bills can be paid with balance transfer credit cards also. In fact, any vendor or third-party bill payments can be made through this process. For consumers looking for an affordable, strategic way to consolidate all bills and to regain control of finances. This is an excellent option to consider.
The Quest for Debt Relief and the Best Credit Cards for Balance Transfers
The quest for debt relief is unfortunately common. There are many different forms of debt relief to consider when struggling with high credit card balances and other types of burdensome debts. However, balance transfer credit cards are a convenient, fast and easy solution available to most consumers. If you are looking for a great way to improve your financial health, consider looking for the best credit cards for balance transfers as a first step today.
Compare the Best Balance Transfer Credit Cards and Deals on Balance Transfers
CreditFast has reviewed the best balance transfer credit cards on the market. Some of the credit card offers are from our advertising partners. CreditFast has objectively reviewed the features and benefits of each credit card. We have chosen balance transfer credit card offers based on our editor’s recommendations.