How to save money with balance transfer credit cards

Carrying a credit card balance long enough can start to feel like you can’t pay it off. And the longer you wait for payment, the more interest you’ll earn over time. It’s a crushing debt.

In such a case, a credit card account transfer is useful. Online marketplaces help you compare lenders and see what each company offers. Find the card that fits your needs.

Here’s what you need to know about what balance transfers are, how they work, and most importantly: You may save interest.

What is balance transfer?

A balance transfer is the transfer of an existing balance from a high interest credit card to a new card (usually a card with 0% APR). These special introductory APR offers are only valid for a limited time period, typically 6-21 months. During that time, no interest accrues on the balance and all payments are made directly against the principal.

Cardholders are typically required to pay a balance transfer fee of 3% or 5% of their balance. For example, if you send $5,000, the fee will be $150 or $250.

If you’re considering a balance transfer credit card, you should also make sure your credit is in prime condition.You can start working on your score today.

How to save money on balance transfers

If you can afford to pay off your balance before the zero interest offer expires, you can save yourself hundreds or even thousands of dollars in total interest. Check out some of our offerings to determine how much you could potentially save.

Let’s say you owe $5,000 on a 15% APR card and are eligible for 12 months on a 0% APR card with a 3% balance transfer fee. If you pay off your balance before the 0% introductory APR period ends, you save $1,073.89 in total interest. See how much you can save with our Balance Transfer Calculator.

Even if you can’t pay the full amount before your first year’s APR expires, you can still save money by paying most of the balance before the higher interest rate applies.

How to choose a direct debit card

Not all balance transfer credit cards are created equal.

There are a few things to consider when choosing a card.

1. The credit card with the longest introduction date. This will give you more time to pay off your balance. Many cards have 0% APR for both purchases and balance transfers, but balance transfers may have a shorter introductory APR period than new purchases. Find out how long your balance transfer offer is valid and whether your new purchases will accrue interest.
2. A credit card with no annual fees. Look for cards with other benefits such as Cashback benefits Sign-up bonuses when you make certain purchases or spend certain amounts within 90 days. Be careful not to have a large balance that you cannot repay.
3. A card with low transaction fees. The minimum available is usually 3%, but some cards may not charge any direct debit fees at all. However, if you find a card with a longer introductory APR period, it may be worth paying a higher balance transfer fee.

Note: Balances cannot be transferred to your current card issuer. For example, if you have a balance on your Wells Fargo credit card and you transfer that balance to a new Wells Fargo card, you will not be eligible for APR adoption benefits. You will need to select a new credit card company.

Improve your credit and give yourself the best chance of getting a good card.

Things to know before applying for a balance transfer card

Most credit card companies only offer first-year APR offers if you pay them on time. The company may withdraw the offer if payment is late.

To avoid this, set up automatic payments on your card and complete the payment a few days before the official due date. Then create a reminder on your smartphone and log on to double check that the automatic payment has been completed.

You will also need to call your current credit card issuer or log on to your account online to transfer the balance yourself. Start this process as soon as a new card is opened. The introductory APR offer countdown starts when the account is opened, not when the balance is transferred. Waiting too long may make your balance ineligible for the interest-free discount.

Most balance transfer offers are credit score Between 700 and 750, but some cards accept scores between 650 and 700. If your credit score falls below that range, you’ll need to wait and approve. improve credit score Before applying for bank transfer.

Having a credit card balance can be a sign of overspending. Start tracking and budgeting your expenses before you request a balance transfer. Before you can apply for a balance transfer, you need to fix the habits that caused your credit card debt. Otherwise, this strategy is only a temporary fix and not a long-term solution.

Consider a debt consolidation loan as an alternative

debt consolidation loan Borrowers can combine their debts into one simple low-interest loan. The benefits of this unique financial option are multiple. The three main benefits are:

• Save money with lower interest rates. debt consolidation loan Especially if you have a high-interest credit card. According to recent Federal Reserve data, the average interest rate on a 24-month personal loan was 8.73%. Almost double the average credit card interest rate of 16.65%.
• You can improve your credit score. After you make your series of loan payments on time (assuming you don’t pay off your debt elsewhere), your credit rating begins to improve.
• You can know when to stop paying: with debt consolidation loan, with a definitive repayment date, so borrowers know exactly when they can stop making payments. So even if the consolidated debt is large, at least you know when it will be discharged.

If a debt consolidation loan seems beneficial, contact a loan expert to help you get started.