Things to Consider Before Opting for Balance Transfer Credit Cards

Balance transfer credit cards are considered by savvy card holders as a way to consolidate debt. The idea is pretty simple as it involves only three steps. First, you choose a card with 0% APR on balance transfers and apply for it. Once you get approved, you can then transfer your existing balances to the new card. Because of its simplicity, you may think that it is a good concept and it might just be the ultimate way to erase your debt. However, there are essential things that need to be clarified first. Knowing them will allow you to successfully move your balances and hopefully have a more stable financial life.

0% Interest on Balance Transfers

0% APR is a good deal. When you transfer your current balances to a 0% APR card, you do not have to pay the interest. You can choose to pay the minimum required payment without increasing the money you owe. As you know, interest rates are extremely high today. If you cannot pay on time, it is so much better to use a 0% interest card. Note that 0% does not mean that there will be no fees when you transfer your balances. Usually, the transfer fee starts at $5 or may vary according to the total amount that you will be transferring.

Credit History

Time and again it has been emphasized just how beneficial it is to have good credit rating. Most banks will instantly turn you down because you are a risky consumer with your poor credit rating. 0% interest cards may not be within your grasp due to your current score. If you can, you should be able to fix your score before you even apply for a new card. The good news is that you can actually find cards that approve even those with poor credit rating. All you need is patience and determination in locating the best card for your present situation.

Total Amount

If you can obtain a 0% APR card for your balance transfer, you will definitely save tons of cash in the long run. You should know though that not all your balances will be transferable to your new card. For instance, if you have a total of $50,000 outstanding balance, you may only be able to move $10,000 to $30,000 of your balances to the new card. The amount will still depend on the card issuer and the card itself.

The chief appeal of a balance transfer card lies in the fact that it offers lower interest rates than a traditional card. For example, instead of paying 12% monthly on your outstanding balances, you can clear your dues without worrying about the interest rates for, say, five months. This is already a huge help, especially for those who have large credit card debt.

When used correctly, a balance transfer card can become a great debt consolidation tool as it helps you reduce the interest payable. It also saves you from the hassle of constantly keeping track of various due dates, which happen when you have multiple cards to pay each month.

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