Balance transfer credit cards is the transfer of outstanding debt (balance) in the credit card account to an account at another credit card company. This post today, we introduce to people about some advantages and disadvantages of the balance transfer credit cards.
In the previous post, Info Credit Free introduces people to the Swift Code HSBC USA Inc in the US, to get more information people can read the article Swift Code HSBC USA Inc for people to transfer money overseas. Now, let find knowledge about balance transfer credit cards in the post today.
BALANCE TRANSFER CREDIT CARDS
Just like a lot of article posts such as best place to get a personal loan with bad credit, loan places for bad credit, best loan companies for bad credit,…, this post about balance transfer credit cards also includes some main parts.
1. The balance transfer credit cards work in ten steps
1.1. See where you stand and choose balances to transfer
List all your credit cards, the balances and the interest rates. Choose one or more high interest cards that you want to transfer to save interest. The balance is not your name to qualify for a transfer, so if your new spouse has a high interest credit card balance and you have great credit, you can use the 0% offer to help pay that person an old balance and start together debt-free.
1.2. Calculate your balance transfer fee
Note the balance transfer fee if any, and calculate the amount you will pay for the amount you want to transfer. The fee is usually 3% to 5%, meaning you will pay $ 30 to $ 50 for every $ 1,000 you transfer. Even with the new, lower interest rate, will you still come out first after the balance transfer fee?
Also, note if there is a limit on the amount of the fee. If so, that could really make the transfer of larger balances worthwhile. For example, suppose there is a balance transfer fee of 3%, up to $ 75. You transfer a balance of $ 5,000 – but because of the limit, you don’t pay $ 150 (3% of $ 5,000) but 75 dollars, this is an effective interest rate of only 1.5%.
1.3. Understand the penalties
After transferring money, you can just forget the balance and leave it there for a year. You still have to make a minimum monthly payment on the card before the due date to keep that 0% rate. If you miss one, the balance may immediately start to generate interest.
Pay attention to the interest rate you’ll pay: Will it be a default rate that’s higher than what you’re paying now? Similarly, if you default under any of the cardholder agreements, such as making payments late, going over your limit or bouncing a check, the interest rate can jump to a penalty rate which could be as high as 29.99%.
1.4. Know when the promotion ends and what happens when it does.
0% rate is usually valid for 12 or 18 months. If you have a balance transfer payment plan in the introductory stage, calculate whether you are able to pay in full during that time. If not, what interest will you pay when the referral period ends, and will you still come out ahead?
By the way, do not expects a reminder from the credit card company that your promotional rate will end: Hopefully you will miss the deadline and have to start paying interest on the balance.
1.5. Check the time limit for completing the transfer.
If you receive a new credit card account, the terms will require you to complete a balance transfer for a certain number of days (usually one to two months) to receive any promotional rate. Read the printout carefully to see how big the window is. Complete the transfer the day after the window closes and you will pay interest regularly.
1.6. Make sure you meet the basic requirements for the balance transfer
In general, you cannot make a credit card balance transfer if your new account is in the same company as the card with the balance you want to pay – for example, you cannot transfer the balance from this Citibank credit card. to another credit card. In addition, if you have an overdue payment with the creditor you want to transfer the balance to, or if you have applied for bankruptcy, the transfer request may be denied.
1.7. Decide how much to transfer
Check the credit limit on the new card: You can not request a balance transfer more than your available credit line and the balance transfer fee is charged to that limit. For example, if you have $ 10,000 of available credit, you can win a $ 10,000 balance transfer with a 3% balance transfer fee; You need to have $ 10,300 available credit to complete the transaction. The most you can transfer is about $ 9,700.
1.8. Decide where you want the balance transfer funds to go.
Do you want them to come directly to another creditor to pay off your balance? Do you want money to be deposited into your bank account so you can pay off all other debts? In the latter case, make sure that the credit card clearly states that depositing your bank account will not be considered a cash advance. If you accidentally withdraw money in advance, you will pay interest for the transaction immediately and usually at a high level.
1.9. Request the balance transfer with your new creditor by following its specific instructions.
Although called a balance transfer, the real thing is that you are using a credit card to pay another credit card. Mechanisms look like this:
- Balance transfer check: The new card issuer (or card issuer you are remitting to) provides you with a check. Simply perform a check for the card company you want to pay. Some credit card companies will even allow you to test yourself, but again, make sure that this won is considered a cash advance.
- Online or telephone transfer: Have your name, payment address and account number for the balance you have paid, with the amount you want to transfer.
- Direct deposit: There is a bank account and the route number of the account where you want to remit the balance.
1. 10. Watch your old and new accounts
You can inquire, if it is not stated anywhere, about the transfer time frame. In any case, allow at least two to three days – and up to 10 days – to let your new creditor pay for your old creditor. Eyeballs each old account with which you can pay to see when the balance is transferred.
Meanwhile, don’t miss out on any payment periods on those accounts so you don’t incur any late fees. Also keep track of your new account to know when your balance has been transferred, especially if you want to use your card to make purchases.
2. The advantages and disadvantages of the balance transfer credit cards
2.1. The advantages of the balance transfer credit cards
Lower credit card interest rates, which is especially beneficial if you currently have high interest rates on the credit card balance you are considering transferring. Transferring your balance to a credit card with a lower interest rate will give you the opportunity to make a larger amount of your credit card balance.
Since you will have lower interest rates and may not have to pay financial fees, most of your monthly payments will aim to reduce your credit card balance, instead of following interest rates. You can even pay off your balance completely by the time the promotion period ends.
You can consolidate your credit card debt, leaving yourself with fewer credit card payments to make each month. Moving multiple credit card balances to a single credit card (given it has a high enough credit limit) can eliminate the hassle of making multiple credit card payments to several different credit cards. It’s easier to pay off one credit card balance than it is to pay off several.
You can transfer your balance to a credit card with better terms. For example, if your current credit card has bad terms – high fees or short grace periods – you can transfer your balance to a better credit card and close your old credit card account. forever. New credit cards can even provide credit card rewards for your new purchases.
Since you’ll have a lower interest rate and possibly no finances charges, more of your monthly payment will go toward reducing your credit card balance, instead of towards interest. You may even be able to pay off your balance completely by the time the promotional period ends.
2.2. The disadvantages of the balance transfer credit cards
You may end up with a higher interest rate if you are not eligible to receive promotional interest. Not everyone is eligible for promotional interest rates. You often have to have a great credit score to receive a low interest rate balance transfer offer. On the other hand, you will only be eligible to receive a normal (higher) transfer rate.
Balance transfers can be expensive when considering annual balance and fee transfers if a new credit card is available. Before you transfer your balance, make sure you charge your balance and the interest you will pay if you leave a balance on your old credit card. Leaving your balance on the old credit card may cost less in the long run.
Transfer balances may hurt your credit score. Registering and opening a credit card account can affect your credit score. Not only that, your credit score will be affected whenever you have a credit card with a balance of more than 30% of the credit limit.
This post is about balance transfer credit cards. We provide this information to offer you with some of the necessary information that is useful for getting the best cards. Also if you are using credit cards and would like to know how to borrow money with bad credit, please refer to the Where to get a loan with poor credit link we just provided in the previous article.
In addition, we provide a variety of information on insurance or the Swift Code of each bank in the US in many previous articles. If you are living in the US and want to know about insurance or code, people should read some articles like such as professional indemnity insurance, workers compensation insurance, home insurance USA…
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