"Balance Transfer Credit Card" "Debt" "Blogger" "Travel"
Published past Mohamed Konate | Updated October 13, 2021
A balance transfer credit carte du jour could be your solution to paying off your existing debt faster. Only is information technology the right blazon of credit carte du jour for y'all? Nosotros lay it down for you lot – the upside and downside of balance transfer cards – to assist y'all decide.
What is a balance transfer credit card?
A balance transfer carte is a type of credit carte du jour with little to no involvement rate. Banks and issuers utilise remainder transfers to entice people with existing credit card debt to transfer their balances from ane card to another. By transferring your high-involvement balance to a 0% involvement credit card, you save money on payments.
Why exercise I need a remainder transfer card?
Consider this: The average Canadian held $3,954 in credit card debt in 2016. twoscore% of u.s.a. carry a balance on our cards. With credit cards having an interest rate of 19.99% or more, you could exist paying at to the lowest degree $790 per year in interest alone!
If you lot accept a large credit carte debt that does not seem to go away, then possibly you should consider balance transfer credit cards. You can transfer your remainder from a loftier-involvement bill of fare to a rest transfer card and enjoy low (2.99%) to 0% interest rate for half dozen-12 months (or possibly a longer paying menstruum).
Ready to find the best credit card for you?Use our credit menu comparison tool | Compare Now |
How does a balance transfer work?
A remainder transfer allows borrowers to consolidate their debt into a single credit card to salvage on involvement payments. This as well makes information technology easier for yous to have stock of your debt, and rail your residual and payments.
Here'due south how it works:
- Depending on your credit score, you lot volition be canonical for a balance transfer credit card.
- Once approved, the issuer will ask for the following details: who you want to pay, their account numbers, and how much of the balanceyou are willing to pay.
- You can transfer your balances from gas cards, store credit cards and other types of credit cards to your rest transfer card.
- Like whatever other credit card, your remainder transfer carte has a credit limit. You can only transfer upwardly to that amount.
- Once your card balance transfer is approved, the provider volition contact your creditors and pay the amount you lot indicated. This procedure usually lasts for 1-2 weeks.
- Yous can also use checks tied to your balance transfer credit card to transfer not-credit-card balances to your new credit bill of fare.
Tip: Make sure to complete the transfer within 60 days from the appointment you opened your account. If y'all have payments due within this timeframe, brand those payments by their due date to foreclose late charges.
What are the residuum transfer fees?
The remainder transfer fee in 2017 was 3%. This ways that you lot pay $300 in fee for a $10,000 balance transfer. Depending on how much you can salve on involvement charges, this may or may not be a skilful idea.
If you are lucky, yous may find a 0% intro remainder transfer charge per unit equally an ongoing promotion from a credit card company or bank. You lot can use an online calculator to compare credit card fees and compare offers.
What are the benefits of a credit card balance transfer?
Balance transfer credit cards are neat for paying down credit card debt faster and for a lower involvement rate. When used right they tin can:
- Help y'all catch up on your existing debt. By transferring your balance on a depression April card, you lot can save coin from your interest. This tin be used to pay for the primary balance and then that y'all eliminate debt ina shorter amount of time.
- Make it easier for you to rails your balance and payment. By consolidating your debts on ane card, y'all only demand to pay one creditor on one due appointment. Did yous that know you tin can also transfer loans for appliances, cars, and other installment payments to your card? Just asking for checks that are tied to your bill of fare.
- Raise your financial well-being. By dividing the residual for a longer timeframe, say 12 months, you tin can finally grab up on payments.
What are the downsides of a credit card balance transfer?
While a balance transfer seems a proficient opportunity to pass upwards, it does not come without downsides. While a balance transfer seems like such a good opportunity to turn down, it does not come without its downsides.
Here are the cons of a credit card residuum transfer:
- It requires a good credit score to get the best options.
- You could terminate up with higher April if you don't pay your residual in full at the end of the promotional charge per unit.
- You lot may go disqualified for the low promo interest rate if you miss a single payment.
- A balance transfer could negatively impact your credit score. On the other hand, you tin can amend your score with consistent on-fourth dimension payments each month.
With more credit available to you, you may be tempted to add more to your debt.
While there are downsides to a balance transfer, information technology is notwithstanding worth considering for long-term financial planning. When used appropriately, information technology can aid y'all relieve money and eliminate debt faster. If you are ready to cull a credit bill of fare for remainder transfer, read some of our tips below.
How do I choose the best balance transfer credit card?
There are 3 features that you must evaluate when looking for a low residual transfer credit card:
- Involvement rate
- Length of time of promotion
- Balance transfer fee
It is best to compare these features when choosing a credit card. A good credit bill of fare comparing tool tin help you with this.
Tip: When choosing betwixt balance transfer credit cards, assess whether y'all tin can save more with a 0% interest card with a fee, or a credit carte with no fee but with a 2.99% interest rate. You don't want to pay the 3% balance transfer fee but for the sake of a 0% involvement promotion.
At the aforementioned time, expect for cards that have a longer promotional period. This ensures that you tin can stop paying off your residue before the regular interest rate kicks in.
Need help finding the best residual transfer credit card? Cheque our website to compare credit cards and find the right 1 for y'all.
Ready to discover the best credit bill of fare for yous?Use our credit card comparison tool | Compare Now |
Author Bio
Mohamed Konate
Mohamed Konate is a personal finance skilful, blogger, and marketing consultant based out of Toronto. He is a former fiscal services professional who worked for many years at major Canadian financial institutions where he managed the marketing strategy around diverse financial products ranging from credit cards to lines of credit. Mohamed is passionate about personal finance and holds a Bachelor in Business Assistants from the University of Quebec (Montreal) and a Master in International Business organisation from the University of Sherbrooke (Quebec).He is also the author of the Canadian Credit Carte Guidebook.
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