Should you do a credit card balance transfer? Great question! Ahh, I can remember my very first balance transfer. I remember the joy of getting a lower rate, the feeling that I was doing some type of “big shot” transaction, and more. Those were the good days when I was just starting to get my feet wet in the credit card world. In this article below, I will tell you the tips on whether or not to do a balance transfer, and also what you need to watch out for (make sure to read that part).
Balance transfers can be a great (or terrible) decision based on a number of factors. If you are struggling to pay your bills, want to consolidate your debt, or just want a lower rate, then a balance transfer may be a terrific option for you. Here are some tips to help you out.
Should I Do a Credit Card Balance Transfer Transaction? What Are the Benefits?
Credit card balance transfers may be a great idea if any of the following apply to you:
- You want to pay off several small credit cards and manage only one larger balance card
- You have a high interest rate on your current card, and received an offer for a much lower rate with a new or different credit card
- You want to close an old credit card, but have a remaining balance and would prefer to open a new card and switch that balance to a new company
Any of those 3 options above could be a great reason to transfer your balances. I have transferred balances from a high interest rate to a 0% rate before, which save me HUNDREDS on interest charges.
Important Things to Consider When Transferring Credit Card Balances
- Check to see if there are balance transfer fees. These are usually up-front charges you will incur once you transfer a balance. Some of these fees can be as high as 3% of the balance or more. So if there was a transfer fee of 3% on a balance of 6,000, that would be a fee of $180.
- Check the interest rates–many credit card companies will offer special promotional APR’s on balance transfers. Make sure to get a great rate of less than what you currently pay. I often get 0%, and sometimes can get it with NO balance transfer fees!! Also, make sure to know how long that promotional interest rate will last. Will it last 6 months, a year, or the life of the balance?
- Will You Get Approved for Enough–Sometimes you may not know how much you will get approved for ahead of time. So you want to make sure you will get approved for enough to transfer the balances from the other cards, plus have enough credit to cover any interest charges or balance transfer fees.
- Will it Affect Your Credit?–It will post to your credit report, and could slightly lower or affect your credit score in some cases. It shouldn’t harm it too bad (after all, I have done this at least 5 times and have great credit), but it could affect your credit.
- Enter the Correct Transfer Amount–Always make sure you transfer the correct amount. You can get the full amount you need to transfer from a credit card statement, or by calling and speaking to an account representative.
- Enter Correct Payment Address–Some balance transfers may require you enter the old bank or credit card companies payment address, along witih your old account number, etc. Make sure you double check this information completely, to avoid any mistakes.
Balance transfers are a great way to save money on your credit cards. Always check the latest balance transfer deals, and if you can benefit from a balance transfer, go for it. Good luck!