You have your own credit card and you need to transfer some of your money to another checking account. This research article tells you everything that you need to know about balance transfers. This is including the definition of a balance transfer.
What is a Balance Transfer?
A balance transfer is the transferring of an installment monthly payment owed from one credit card to another. One has a higher interest rate and your transferring the balance to the lower interest rate. This allows for card A with the higher interest rate to have a balance of $0. Then the payments owed for both credit cards A and B to be paid with the lower interest rate from credit card B.
Things That You Need to Know About Balance Transfers
1) Consolidation Simplifies Your Life
One of the things to consider before making a balance transfer is the consolidation of your bills. This always makes things simpler. Instead of having two payments, you now can eliminate the debt owed on one card and pay the lower interest rate. Also, consolidation allows you to make one payment for the entire amount owed.
2) Ability to Transfer Other Loans
No-Interest balance transfer credit cards will often allow you to transfer monthly installment loans by using checks. You will need to bring them to the bank that issued the credit card.
3) Balance Transfer Fees
Once you make the decision to do a balance transfer, you will need to understand that balance transfer fees are inevitable. These are typically around 3%, but it is based upon a certain percentage of the total amount that you are transferring.
4) Balance Transfer Rates Expire
Please keep in mind that the lower interest on the transferring credit card will expire. Often, after a period of about 6 months to 1 year, the credit card that is allowing the transfer with a lower interest rate will increase. The initial interest rate on the lower interest credit card does not last forever. Once the interest rate on the transfer credit card increases, you will be liable for payment using the increased rate.
5) New Purchases Have Their Own Set Rates
Once you have made a new purchase and decide to do a balance transfer on the lower interest rate credit card, there is a buyer be warned sign. It says that new purchases carry their own APR and cannot be lowered to the rate of the transferring credit card. In other words, even if you want to transfer your new purchase to the 0 interest balance transfer credit card, there are laws that will prevent this. These laws state that only transferred balances can be used for this type of transaction. This does not include new purchases.
As with anything, remember to do your homework. These tips will allow you to see the whole picture. They will keep you informed as you make your decision about transferring your high-interest installment payments to a lower interest balance transfer credit card.