How to do a balance transfer
A balance transfer can be a valuable tool if you’re struggling with high-interest credit card debt. Many credit card issuers offer balance transfer credit cards with 0% APR introductory periods that allow you to pay back what you owe without interest.
With the right introductory APR offer, you have the opportunity to avoid costly interest charges while you work to pay off your transferred balances. This period of relief can help you pay off your debt faster while saving you money.
Here’s how to set up a successful balance transfer in four steps:
- Apply for a balance transfer card
- Transfer balance to new credit card
- Wait for the transfer to complete
- Pay off your balance
Before a balance transfer
Like many things about your personal finances, balance transfers have pros and cons is worth considering. A balance transfer credit card will benefit you more if you have high-interest debt and need more time to pay it off. Before you begin, take a close look at your financial situation to see if you’re in the right position to complete a balance transfer.
A balance transfer is best for less than $10,000 in debt, whether on a single credit card, multiple cards, or different types of credit accounts. You cannot transfer more than your credit limit, and $10,000 is the maximum for most consumers.
It’s usually easier to qualify for a premier balance transfer credit card if you have a good or excellent FICO score (between 670 and 850). You may still be able to find a balance transfer credit card with a credit score below 670, but it will likely have a shorter APR intro period. This may make it harder to pay off your debt before the introductory offer ends.
Here are some things to look for when compare balance transfer cards include:
- Introductory APR Offer Duration: Most balance transfer cards offer 0% interest for over a year. The longer this interest-free temporary window lasts, the more costly you can avoid Credit card TAP. It is important to note the regular APR of each balance transfer card since your interest rate will eventually convert to this rate. after offer intro APR.
- Types of debts you can transfer: Most balance transfers involve transferring debt from one or more credit cards to a new card, but some issuers allow you to transfer different types of debt, including car loans and student loans (although this is less common). Review the terms and conditions of the card to make sure it can accommodate the type of debt you want to transfer.
- Balance Transfer Fee: Most balance transfer cards charge a balance transfer fee 3-5% of your balance. So if you transfer $5,000 of debt to a balance transfer card, you’ll pay an additional fee of $150 to $250. A few credit cards do not charge a balance transfer feealthough these fee-free transfers often come at the cost of a shorter TAP introductory period.
During a balance transfer
Balance transfers are a great way to really get the debts that can accumulate due to high interest rates under control. Let’s see how the process works in four easy steps.
1. Apply for a balance transfer card
You can apply for a balance transfer card online in minutes. To apply, you will need to provide basic personal and financial data such as your name, address, social security number, and income.
In some cases, you can begin the balance transfer process as part of your application. The balance transfer credit card app may ask you what balances you plan to transfer to the new card, so make sure you have this information handy.
Keep in mind that applying for a credit card with balance transfer may result in difficult investigation on your credit report. The effect this has on your credit score is temporary. However, increasing your credit with a new balance transfer credit card could improve your credit utilization rate and have a positive impact on your long-term credit score.
After applying for your new balance transfer card, you’ll usually know if you’ve been approved immediately. If you are not immediately notified of your approval, you may need to wait for an email from the credit card company. learn that your the credit card application is “pending” or “under review” can be nerve-wracking, but be patient. In most cases, your credit issuer will respond to you within a few days.
2. Transfer the balance to the new credit card
Transferring a balance is quite simple. Although each credit card issuer’s balance transfer process is slightly different, in most cases you will be able to transfer your balances over the phone or online.
You will need to provide basic information about the credit cards whose balances you plan to transfer, including card numbers and the amounts you wish to transfer to your new card. If you need more help with how to transfer a credit card balance, you can visit your credit issuer’s online resources or call their customer service help.
3. Wait for the transfer to complete
Keep in mind that balance transfers take time. Transferring your balance can take between a week and a month. It’s important to continue making payments to your old cards until your balances have been fully transferred to your new 0% APR credit card. If you don’t, you risk incurring new interest and charges on your old cards for missed payments.
After your balance transfer is complete, follow up with your previous credit card issuers to ensure the accounts show a $0 balance. Once you’ve confirmed the $0 balance, you can stop making payments (although you might not want to close the account).
4. Pay off your balance
Once your balance transfers are complete, you should be able to see the amount you transferred to the new card. In order to pay off your debt faster, it’s important to start making payments on the balance transfer credit card.
It’s important to make sure you can make good use of the 0% APR introductory offer to pay off your debt. Before applying, create a debt repayment plan. The more money you can contribute to your transferred balance each month, the faster you repay debts. Remember that every dollar you pay during your 0% APR period has a greater impact, since 100% of it goes towards the balance you owe, not interest payments.
Look at your monthly budget and identify areas where you can reduce your expenses, at least temporarily. Controlling your spending will allow you to get your current debt under control, while developing healthy financial habits to help you avoid getting into debt again in the future.
The bottom line
A balance transfer can make it easier to consolidate and pay off debt while saving on interest. The amount of your debts and the level of your credit score can determine whether or not a balance transfer is a good choice for you. If your credit score is over 670 and you have less than $10,000 in debt, a balance transfer can be a great tool to help pay off your debts.
As long as you maintain sound financial habits by consistently paying the minimum payment each month (if not more), you’ll be on your way to paying off your balance interest-free. It is important to take advantage of the 0% APR period to maximize its benefits.