When it comes to paying off debt, balance transfers are one of the popular ways people adopt to get rid of debt. Balance transfer credit cards are easily accessible in the market and they offer a 0% interest rate on balances a cardholder transfer. This means they are not bounded to pay interest charges during a set period of time (also known as 0% intro APR). Getting a balance transfer card is not complicated. Once you apply and get the application approved, you are able to transfer your debt to it using your credit card account.
Before you accept a balance transfer card deal, you should consider the following important things to make a wise decision.
Balance Transfer Credit Card can help Save Money
One of the major benefits of balance transfer credit cards is that you can save a lot of bucks. These cards usually come with 0% offers that are nice to have if the interest rate of your current credit card is higher. And you can save a lot of bucks in terms of paying zero to the lower interest rates.
You could Get out of Debt Faster
One of the biggest perks of a balance transfer credit card is that you get a 0% interest rate for a set period of time. And you can use it to pay off creditors more quickly without spending a lot of bucks in terms of interest amount. When you transfer your debt from one credit card to another via balance transfer, your total monthly payments go towards the principal amount and there is no need to pay interest charges. And it helps you get out of debt as faster as possible. Furthermore, you can also consolidate your credit card debt onto one 0% credit card to free up some cash flow in your monthly budget. It also keeps you from managing different accounts as you can manage and pay all your debts using your interest-free credit card.
Additional credit card perks
When you apply for a balance transfer credit card, they give you several perks and benefits like travel points, cashback, discounts on online shopping and free rewards, etc. You can redeem free rewards for free or discounted stuff as per agreed terms and conditions. As a result, you can get more in less or save money for other things. However, you should apply for the right credit card with perks and benefits you can easily redeem. For instance, if you travel often, you should apply for a travel card that offers free mileages and travel points.
Simplify your finances
A balance transfer card is one of the best ways to simplify and streamline your finances in the best way possible. Instead of making multiple card payments, you can transfer all your balances to one credit card to consolidate your debts. This way, you will need to manage paperwork and payments for online one credit card account.
Balance Transfer Cards are not for everyone
A drawback of balance transfer cards is that not everyone can qualify for them. These offers are introduced to people with good credit ratings and history. This means, if you have a poor credit score, your application for this type of card could be rejected. Even if you get the deal, the credit line or usage limit will not be larger to meet your financial needs.
They Come with a Fee
Most balance transfer credit cards are not free and come with a particular fee. Sometimes, you are also charged a fee based on the amount transferred between cards. The fee of such cards can range free 2% to 5%. This means the more money you transfer, the bigger amount you will be paying as a transfer fee.
Balance Transfer Deals are Temporary
Credit card users are usually tempted with 0% interest. Enticing zero percent offers wouldn’t last forever. Most offers are for about 6 months. Even some are as brief as 3 months only. That’s why; experts always suggest reading the fine print and terms before accepting the balance transfer deals.
You can’t Transfer more than your Credit Limit
When you are approved for a balance transfer offer, the card provider also approves a credit limit. You cannot exceed the available limit when making purchases or balance transfers. This is the most important thing you should aware of if there is a huge debt on your other card. Also, don’t forget about the transfer fee as it will also be added to your monthly payments. If your balances on other cards are too high for the available credit limit, you should ask to increase the limit or just transfer the balance for the given limit.