Selecting Balance Transfer Credit Cards
by Debt Jerk
What is a Balance Transfer Credit Card?
A balance transfer card functions just like any other credit cards, but has the option of transferring balances from existing cards to your transfer card. The balance from the first card will then be counted as a balance on the new balance transfer card, and all rules and fees will come from the credit card company. Only one or several balances from existing credit cards can be transferred over, as long as they don’t exceed the credit limit set on the transfer credit card.
Why Use a Balance Transfer Card?
The main purpose of transferring balances to a credit card is to save money. One can transfer the balance of a high interest creditcard to their new one, and save money from having to pay high interest rates on a monthly basis. It can also be beneficial if the minimum monthly payments are lower on the new card, if one is going through a time where they cannot afford to pay much on their card.
What to Look For When Selecting a Card
When selecting a card for balance transfer, there are a few things to look for to make sure you will actually be saving money. First off, the transfer card should have a lower APR than your other cards, since the purpose of transferring balances is to save on interest payments.
You will want to make sure the APR is fixed, since a variable rate can actually cost hundreds of dollars in only a matter of months. It is also important to asses the fees associated with balance transfers, since some credit card companies do charge fees for transferring the balance. Although a couple of dollars isn’t much to pay for all the money you’ll save from lower interest, some companies can charge a fee of up to $100 for every transfer made on the card.
Many balance transfer credit cards will offer an introductory period on transfered balances, which is a great way to save a lot of money from avoiding interest fees. The only problem is that the introductory period usually lasts a year or less, and then the interest payments really start to stack up. If you do plan on paying the balance you transfer before the introductory period ends, it can be a great way to save money. If you don’t plan on it, it is probably best to choose a card without the introductory period.
Additional fees and charges such as late payment or over limit fees should also be considered, since not everyone is able to pay their bill on time every single month. These fees can range anywhere between $5 and $50, and they should be considered when choosing the best card.
Although the card may seem appealing, it can turn into trouble when hundreds of dollars are accumulated from payments that are only a day late. Using the balance transfer option on a balance transfer credit card can really save you a great deal of money, as long as you choose the best card for your current situation.
By making sure the APR is lower than your current cards, knowing all of the various fees associated with the card, and even finding out if there is an introductory period will make your decision much easier, and you can be on your way to saving money with a balance transfer credit card.