5 Best Ways To Understand a Balance Transfer Credit Card
You will likely have received numerous offers from credit card companies for balance transfers. But what exactly are they offering you and is it the right choice for you?
Here are 5 essential credit card tips for understanding credit transfers and whether or not they are right for you.
A Balance Transfer from One Credit Card to Another
Essentially a credit transfer is merely the transfer of one credit card balance to a different credit card. The credit card company is offering to pay down your old debt and for you take on a new loan. They want you to start a new loan with them on a different credit card for different terms.
When to Credit Transfer Between Credit Cards
The most common reason for a balance transfer is to receive a new, lower financing rate. Basically, better than your old credit card was offering. Credit card companies look for trustworthy borrowers who are paying high-interest rates. They then offer to take on the loan at a lower rate that better reflects their ability to finance their loan.
Most Balance Transfers Have Fees
Most credit transfer offers come with a one-time fee that is a percentage of the amount transferred. Therefore, you need to consider the cost of the transfer when balanced against the lower rate offered and the length of time until you repay the loan.
Most Balance Transfers Have Limits
Most offers for balance transfers will be for a limited amount of a loan. If your current credit card balance is low enough, then this will not be an issue. But many people are surprised when their credit transfer is only available for a small part of their overall loan.
Many balance transfer offers come with low initial rates that are attractive, but then the rates increase substantially after a brief introductory period. You need to read the offer carefully to determine if you will save money in the long run or whether you can quickly pay down your credit card debt during the initial period with the lower rate.
A Balance Transfer May Be the Right Solution for You
If you are receiving offers for credit transfers, then there is a good chance that the rate you are currently paying is higher than it needs to be. However, before you agree to a balance transfer for your credit card debt, it is important that you check all the details to ensure that the transfer is still the right choice after accounting for transfer fees, transfer limits, and future rate increases.
Balance Transfer Credit Cards
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