So you’ve heard credit card ads talking about balance transfers and 0% introductory rates. What does this mean exactly? Well, a balance transfer is a way for you to move the debt you have on one credit card to a new credit card. You then pay that debt on the new credit card, which can often come at a friendlier rate. Some credit cards will offer a 0% introductory rate for the first 12 months or so, which means that you can move your debt onto this new card and not have to pay any interest on that debt for those first 12 months. That’s a pretty great deal especially if you were paying over 10% on that debt on its previous card. Now you can pay down your principle without paying additional interest.
How to do a balance transfer
Usually, you can simply request a balance transfer online or over the phone. And you can typically request different types of debt to be moved onto the new credit card, such as debt from personal loans or auto loans. The actual amount of debt you can transfer will likely depend on what your credit limit is. Best practice is to ensure you read your card’s terms and conditions.
When to do a balance transfer
The most important time to do a balance transfer is when you can move debt from a high interest account to a lower interest credit card. This is especially useful if you can get one of those 0% introductory rates. Additionally, you might want to do a balance transfer if you want to consolidate your payments onto fewer cards so you have less to keep track of. However, watch out for any balance transfer fees. They might be 3%-5% of the transfer amount with some minimum, so you definitely want to ensure you’re transferring enough to make it worthwhile…….Read More>>