Posted by A Balance Transfer: What Is It?
By moving your balance to a card with a reduced interest rate, or even better, one with an introductory 0% APR offer on balance transfers, you can save money on your current high-interest debt. When transferring debt from one card to another, there is occasionally a Balance Transfer Credit Cards fee, which is normally between 3% and 5% of the transferred sum.
Do the arithmetic before deciding to move your debt to another card because this fee will increase the amount of debt you have. It’s probably not a wise financial decision if the amount you’re paying in balance transfer fees exceeds the amount of interest you’d save by making the transfer.
What Is a Balance Transfer Credit Cards at 0% APR?
Transferring debt to a credit card that offers a promotional 0% interest rate on the transferred balance is known as a 0% Balance Transfer Credit Cards. This can help you save money because any payments you make toward the amount on a 0% card will only be applied to reducing the principal during the intro period and not to any accumulated finance charges.
These deals have a finite lifespan that might range from six months to almost two years. Any balance that remains after the 0% APR promotional period has ended will be charged interest at the card’s standard rate. Remember that there can be a Balance Transfer Credit Cards fee, so a 0% balance transfer might not be fully free.
What Happens During a Balance Transfer Credit Cards?
A Balance Transfer Credit Cards primary objective is to reduce the cost of existing debt. By enabling you to move your debt to a different credit card, ideally one with a lower rate, a balance transfer credit card can help you save money. After transferring the debt, you’ll use the new card to make payments. On your new balance transfer card, you should ideally refrain from making any further purchases so that you can concentrate on reducing the balance.
It usually only makes sense to make this move if the new card has a lower interest rate than your previous debt or comes with a low or 0% promotional offer as the most (but not all) credit cards charge Balance Transfer Credit Cards fees.
What Is a Fee for a Balance Transfer?
You will be charged a fee if you transfer debt from one credit card to another. Typically, it is 3% or 5% of the transfer amount. It’s crucial to think about any fees you could have to pay before applying for a balance transfer card because they will increase your current debt. Make sure you’ll actually save money by transferring your balance by completing the arithmetic.
What is the Time Frame for a Balance Transfer?
Depending on the card issuer of the card you want to transfer a balance to, a balance transfer normally takes two to seven days to be processed.
For instance, American Express claims that while transfers from other banks normally take between five and seven days to complete, they may take up to six weeks. Both Citibank and Chase claim on their websites that the average transfer takes two to 21 days to complete.
The bank you’re transferring the debt from and the bank you’re transferring it to will likely determine the precise time for your transfer. Our guide has more information on how long a balance transfer takes.
What Amount Can I Transfer of My Balance?
You can only transfer a certain amount, and that amount is established by the issuing bank and your creditworthiness. Chase limits Balance Transfer Credit Cards to $15,000, for instance. However, there is no assurance that you will be granted a limit on a new card that high. The maximum amount of debt you can carry on a balance transfer card will be $5,000 if, for example, no bank will accept you for a limit higher than $5,000.
Also keep in mind that any Balance Transfer Credit Cards costs will be deducted from your limit and must be taken into account when making the transfer. Therefore, if you are granted a $5,000 credit limit but must pay a 5% balance transfer fee, you can only transfer $4,750 because you must also pay a $250 balance transfer fee.
Rates and Fees for Balance Transfer Credit Cards
0% introductory APRs offer significant savings over carrying balances for balances large enough. To find out how much you can save by transferring your balance to one of the cards on our list, use our balance transfer calculator. You will need the balance you desire to transfer, your current credit card’s APR, the fees, the APR, and the length of the intro period for the credit card you wish to transfer the balance to.
Always try your best to settle the entire transferred sum before the introductory period expires to prevent being charged interest after it does.
How to Transfer a Balance
A Balance Transfer Credit Cards is often simple to complete. Your card issuer will choose the exact stages, but generally speaking, you’ll follow a procedure like this:
Pick the card to which you want to transfer your balance. You will have the opportunity to select to transfer a balance to the new card throughout the application process if you are applying for a new balance transfer card online. If not, you can transfer the funds by speaking with a representative at the bank that issued your new card.
Understand the terms and restrictions of the card you are transferring a balance to by reading the card’s fine print. Among the things to watch for are:
- Does a balance transfer fee apply?
- How long do introductory low or 0%-APR offers last?
- After the introductory period has over, what is the card’s continuing interest rate?
- Transfer the required amount.
Be aware that it won’t be until after you apply for the new card that you will actually learn how much of a credit limit you have. This is crucial since you could not be granted a line of credit with a limit as high as the sum you want to transfer.
Check out our guidelines for thorough directions on how to arrange a Balance Transfer Credit Cards with each particular institution:
- How To Transfer A Balance In 8 Steps
- How to Transfer a Balance Using American Express
- How to Transfer a Balance With Citi
- How to Transfer a Balance With Wells Fargo
- How to Transfer a Bank of America Balance
- How to Transfer a Balance With Chase
- How to Transfer a Balance With Capital One
- How to Transfer a Balance With Discover
- How to Transfer a Balance at 0% APR
The same principles apply to 0% Balance Transfer Credit Cards as to regular balance transfers. After selecting a card with an introductory 0% APR balance transfer offer, you can choose to transfer a balance to the new card during the application process or by contacting the issuing bank directly.
Why Can’t My Balance Be Transferred?
Certain credit cards do not allow balance transfers. Others do, although they may not offer introductory APRs on Balance Transfer Credit Cards and may incur costs of up to 5% of the transferred sum. If the Schumer box in the card agreement for your card does not list a balance transfer APR or balance transfer fees, it is likely that balance transfers are not available. You can and should contact the issuer before applying for a card to confirm, or call the number on the back of your card to get more information.
Using a credit card for a Balance Transfer Credit Cards how to reduce interest rates
On average, interest rates on credit cards are greater than those on other types of finance. Therefore, interest costs can add up quickly when you have a balance, which can make it increasingly harder to pay off your debt. You might save a lot of money on interest fees and pay off your debt more quickly by transferring your current high-interest credit card balances to a balance transfer card with a reduced or even 0% introductory interest rate.
Interest rates on credit cards on average
Your current balances’ interest rates and how long your new card will offer a cheaper rate would determine how much you can save with a balance transfer. In Forbes Advisor’s database, the average APR for all credit cards is now 24.61%, an increase over the previous week.
The typical credit card interest rates by card type are listed below. It should be noted that the average rates in this table represent regular APRs, which start only after any introductory periods with 0% APR that a card may offer.
Consider that your total credit card debt is $10,000, with a 24% average interest rate being paid on it. Additionally, we’ll suppose that you can sign up for a balance transfer credit card with a 3% debt transfer fee and an introductory APR of 0% for 18 months.
You could pay off your debts nine months sooner and save $3,398 in interest fees if you continued to make payments of $400 each month after the Balance Transfer Credit Cards. If you could manage a $572 monthly payment, you’d pay off the entire loan before the introduction period ends and would save $4,001 in interest overall.
Check out Forbes Advisor’s balance transfer calculator for a more individualized estimate of how much you might save with a Balance Transfer Credit Cards.
How to Pick a Credit Card for Balance Transfer Credit Cards
To reduce the cost of the transfer, opt for a balance transfer card with low or no balance transfer fees when choosing the best card for your situation. Remember that since banks won’t permit you to transfer debt from one of their cards to another, you’ll also need to select a card from an issuing bank other than the one you’re wanting to transfer debt from. Finally, think about how long your balance transfer will take. The more time you have to pay off your debt before interest accrues, the better, but the longest 0% APR offers could also come with larger balance transfer fees.
Other things to think about are:
Credit rating. You might not be eligible for some cards if your credit is less than ideal.
low or no interest rates. It can be tempting to choose a card with a zero-interest balance transfer offer, but if you need more time to pay off your debt or you anticipate carrying a balance frequently, a card with an ongoing low-interest offer can be a better option.
longest opening offer. If you only need a temporary break from paying off a bill, think about which credit cards have the longest introductory offer and figure out whether using that card or one with a shorter 0% time period but a lower Balance Transfer Credit Cards charge will result in the lowest cost debt repayment.
enduring value of credit cards. Consider whether you’ll need a balance transfer card once you’ve paid off the debt if that makes sense. While some cards with balance transfer offers only provide an introductory APR deal, others include rewards programs and additional benefits.
Calculator for Balance Transfers
It’s critical to determine whether a balance transfer is worthwhile if you’re thinking about executing one. Use the balance transfer calculator on Forbes Advisor to enter information according on your unique circumstances.
How to Apply for a Credit Card with Balance Transfer Credit Cards
Applying for a balance transfer credit card follows a similar procedure to applying for any other credit card.
Choose the card that might be the best suit for your objectives.
In order to improve your chances of being accepted, make sure your credit report is error-free.
Usually, you can submit an application online or in person at the issuing bank.
You must enter your name, a U.S. address, and your Social Security or ITIN number while completing the application.
Your income and housing expenses may also be requested. The credit limit you’ll be given on a new card will depend on this information and a hard credit pull.
Send in your application. A card issuer may take some time to respond, although many will likely authorize you right away. You must receive written notification from a card issuer explaining the reasons your application was rejected.
How to Get Offers for Balance Transfers
Your creditworthiness and financial condition may play a significant role in whether you receive offers for low or 0% introductory APRs on balance transfers. Without some evidence that you can pay the transferred debt down over time, issuers might not want to accept it right away. There are various ways you can improve your chances of getting a balance transfer offer.
- Boost your credit rating
- On your card applications, be as honest as you can about your income.
- Look for offers of pre-approval from numerous issuers.
- Make sure you have chosen to receive prescreened mail offers.
- Browse the offerings below to find out more about debt transfer credit card offers from various companies:
Offers for Chase Balance Transfer Credit Cards
Offers for Capital One credit cards with balance transfers
How to Obtain Balance Transfer Card Approval
In that the bank will assess your creditworthiness and decide whether or not to provide you a card, getting approved for a balance transfer card is essentially the same as getting approved for any other card. Banks are poised to take on a responsibility since someone applying for a balance transfer card will frequently wish to shift debt from one institution to another. Due to this, the majority of balance transfer cards will only be approved with strong to exceptional credit.
Balance Transfer Credit Cards: Advantages and Drawbacks
Even though a balance transfer card may seem like a good way to reduce your debt, you should weigh its benefits and drawbacks before applying for a new card.
Benefits of Credit Cards with Balance Transfer Credit Cards
Don’t pay interest. When you transfer debt to a balance transfer card, the card typically offers a tempting 0% APR offer, allowing you the chance to avoid paying interest for a limited time.
consolidation of credit cards. Transferring several balances to a single card can make it simpler to manage payments if you have debt on several cards and wish to consolidate your debt.
Change to a card with more favorable terms. Compared to your present card, some credit cards with balance transfer offers might provide better terms or benefits. You can take advantage of a reduction in interest charges as well as the advantages of the new card with a Balance Transfer Credit Cards if the general profile of the card you’re considering is a better fit for your needs than the one you now have.
Cons of Credit Cards with Balance Transfers
Fees for balance transfers. When you transfer debt to another credit card, the majority of credit cards will charge you a Balance Transfer Credit Cards fee. This cost, which normally ranges from 3 to 5 percent of the entire amount being transferred, can increase your current debt load.
limits on transfers. It does not guarantee that you will be accepted for a limit that high just because you wish to transfer $5,000 to a card with a 0% APR balance transfer offer. Like with the majority of credit cards, you won’t learn your credit limit until after you’ve applied and been granted a new card.
Most often, excellent credit is needed. The finest Balance Transfer Credit Cards offers are often only available to people with good to excellent credit, just like the best rewards cards. You might not be approved for the balance transfer card you want if you’re still developing a solid credit history.
How to Use Your Balance Transfer Credit Card to Its Full Potential
Consider getting a credit card as a significant investment. The more time you have to carefully choose the best balance transfer cards for you will be beneficial because there are numerous considerations and problems involved.
Consider the long term when using balance transfer cards in particular.
How much time will it take you to pay off the transferred balance?
Will the promotional low or 0% APR term be over before it expires? Ideally, you will be able to reduce any transferred balance.
Will the card offer any beneficial benefits or rewards once your Balance Transfer Credit Cards has been settled?
Not only should you choose the greatest card, but you should also utilize it responsibly. To minimize interest and late fees, pay off balances and debt transfers on time each time. Additionally, try to keep your overall credit usage percentage at or below 30%. The main advantage of credit cards is the ability to maintain or improve one’s credit, and while balance transfer cards do offer further advantages, at the end of the day they are still credit cards.