Credit card balance transfers can be an extremely useful tool to help you manage credit card debt. This allows you to transfer any outstanding credit debt, be it from one card or several cards, usually cards with a high interest rate to a card that has a much lower interest rate. Balance transfers are like the refinance of the credit card world. This tactic works best by taking advantage of a balance transfer credit card offer that has a 0% APR on balance transfers for a set period of time, with the best current balance transfer offers giving you 18 months of no interest on balance transfers, giving you time to pay the balance off in full and avoid interest charges. While balance transfers are relatively simple to do, there are some things you should know about, before you do a transfer, during as well as afterwards.
You want to keep current with all of your credit card payments before you even consider doing a balance transfer. The reason is the best offers require good credit or better. If you slip on payments this can effect which offers you qualify for. maintaining your credit will allow you to qualify for the best possible offer on the market and potentially save you a lot of money. The new offer could be a brand new card, or it could even be from a card you are already using via a promotional financing offer.
The next thing you need to do is to read the fine print of any offer you are considering before you even click submit on the application. many balance transfer offers have hidden fees. Some offer 0% APR for a set period of time, but if you are late on a payment by even one day you lose the 0% intro APR or worse yet get hit with interest from the date you did the balance transfer. You need to know your cards credit limit, the interest rate you will pay after any promotional period ends. Most of these offers have whats called the balance transfer fee, in fact all but one offer I know of has a balance transfer fee. balance transfer fees are usually set at 3% of the total amount transferred, but a few cards go as high as 5%.
Once you have selected a card offer to do the transfer with, you need to make a solid plan of action to pay off the balance in full or as close to full as you can while the promotional financing offer is active. When you complete the transfers, keep the old accounts open to avoid harming your credit score. By keeping the old accounts open you help to maintain a low credit utilization ratio, which helps to boost your credit score.
Next contact the credit card you are making the transfers to and provide them with the account information needed to make the transfers. Try to make over the minimum payment per billing cycle, remember your goal is to catch up on the debts, not post phone the debts for a few months. When you have repaid the entire debt do get a statement saying so, and keep it for seven years, as there have been mistakes with files where the old credit card company sends an account to collections even after it has been balance transferred. Remember good record keeping is your friend. You also want to avoid making any purchases on the card your transferring your old debt to, if the reason for the balance transfers was to pay down your debts, adding to your debt will foil that plan in most cases.
Other facts about balance transfers:
• Your other credit cards cannot deny you a balance transfer, in fact all they will see is the payment made on your behalf.
• Balance transfers by themselves do not harm your credit score, however each time you open a new credit card, your credit score may take a temporary hit that can last from 3 to 6 months.
• Some cards allow you to transfer non credit card debt, this includes mortgages, auto loans, small business loans, and student loans, HELOC, small business loan, and payday loans.
• You cannot do a transfer between accounts with the same company, for example if you have an American Express platinum you cannot do a balance transfer to an Amex EveryDaySM Credit Card.
• It takes 10 days from the date you open a new account to finalize any balance transfer, due to the Dodd-Frank Wall Street Reform and Consumer Protection Act, Regulation Z. This is to give consumers time to review terms, fine print, and other conditions of any balance transfer.
• Some credit cards will offer rewards on balances that are transferred, allowing you to get a nice bonus while saving you money thanks to any 0% APR intro offer you may be taking advantage of.