What to look for from a balance transfer credit card

What to look for from a balance transfer credit card

If like many people you are struggling with credit card debt, one solution is to apply for a balance transfer credit card. This allows you to move debt with a high-interest rate onto a card with a lower rate.Sometimes, you can benefit from 0% interest for a year or more. Transferring your balance to another card can save you thousands of dollars in interest and get you of out of debt much sooner. However, you need to be smart about the card you choose. If you want to learn about some of the cards available, click here for more. Here are three things you should look for to ensure you’re getting the best deal.

A good introductory APR rate

Balance transfer credit cards usually have a low annual percentage rate or even 0% interest for a period of time. This means you no longer have to pay the usual monthly finance charges you had to pay with your previous card. This should make it easier for you to pay off your balance each month and help you to settle your debt quickly. You should try to get a 0% APR but anything under 3% is also a good deal. Keep in mind that card issuers often send out mass emails to credit card holders who meet certain basic criteria. Even though you apply for a certain offer, you may not get it based on your specific circumstances.

A long enough introductory APR period

Chances are, you’re considering a balance transfer card because of the low or non-existent APR. However, you should note that this is just a promotional offer to get you to transfer your debt to a new company. When the period is over, the interest rate could be quite high. You should, therefore, look for a card with an APR period which is long enough for you to pay off all or most of your balance. The interest-free period is not an opportunity to hide from your debt but to make a concerted effort to pay it. Make sure you are clear on when the low APR period will be up and how much the interest rate will be.

A reasonable transfer fee

You will likely be charged to move your balance from one card to another. Typically, it’s 3 to 5% of the amount you’re transferring. If you are transferring $10 000, the fee could be $300 to $500. The card issuer may simply add this to your balance instead of asking you to pay it upfront which means you may not really think about it. However, if you’re choosing between two offers, you should take this fee into consideration. Depending on the amount you’re transferring and the interest rate you’re currently paying, this fee may be enough to negate the low-interest offer. You should, therefore, try to get a balance transfer credit card which doesn’t charge excessive fees.

Balance transfer credit cards can be really helpful if you’re trying to pay off high-interest credit card debt. However, you need to be careful when choosing an issuer so you get the best deal. Use the tips above to help you evaluate whether an offer is right for you.

p>Katie Johnson is a freelance finance writer

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