If you have debt on a high-interest rate credit card, you may be willing to transfer your balance to a balance transfer credit card.
How Does Balance Transfer Credit Cards Work?
Balance transfer, charges you a lower interest or no interest for a limited time and allows you to renegotiate for better terms. Basically, it allows you to transfer all of your outstanding debt in your credit card account to other credit card company’s account which has a lower interest-rate.
This process is also known as one of the “debt consolidation” methods and extremely helpful to save money in interest. Credit card companies are trying to catch customer’s attention by using the credit card balance transfer which offers not only a lower-interest rate but also better conditions such as less penalties, travel miles etc.
More About Credit Card Balance Transfer
Once you are approved for a credit card balance transfer, you need to provide the lender your account number, the amount of debt you have and tell them how you want to repay.
A credit card balance transfer typically takes around five to seven days. Several major card issuers ask customers to wait for 14 or even 21 days to complete the transaction. Balance transfer will help you to repay your debt by combining your multiple payments onto a new credit card with lower interest-rate.
Some balance transfer cards offer even 0% interest rate, requiring you to make repayments without paying off any interest at all until the promotional period ends which usually takes 18-22 months. Generally 3% to 5% of transferred debt is taken as balance transfer fee. For instance, let’s say you will transfer 5000$ debt onto other balance transfer credit card, and assuming 3% would be transfer fee. It would cost you 150$ to achieve this transfer. The transferred amount is up to your new credit card limit. If you want to transfer a balance of 10000$, and let’s say your new card has a limit of 7000$, then you could only transfer up to 7000$ that is including total transfer fee, too.
Recommendations For Balance Transfer
Make sure you read all the terms carefully and understand everything, especially additional fees and terms. Whether there is an introductory interest rate and if there is, how long it will take. The amount of debt you can transfer to the new credit card. Avoid using your new credit card if you are planning to discharge your debt