How does a balance transfer credit card work?
You apply for a new card with the lower interest rate, move your debt balance to it from the old card. This means you’re using one card to pay off another and clearing the debt on the new card at a lower interest rate in the process.
You have to provide the account number from where you to transfer the balance from and the amount you want to transfer. The amount of balance you can transfer depends on your credit limit. There are chances that your new card issuer might approve the full amount or only part of your request.
You can continue to make payments on your old account until the new card issuer notifies you that the balance transfer has been completed.
How to choose the best balance transfer cards?
When choosing a card for a balance transfer, you must do your research. Many cards accept transfers, but it’s beneficial only if it saves you money. So if you’re planning to get a balance transfer card, ensure to consider these factors:
- The annual fee – A card with no annual fee is best for transfers.
- The balance transfer for fee – You usually will pay a fee of 3% to 5% of the amount you plan to transfer. A few cards have no balance transfer fees.
- The interest rate on transferred balances – Choose a credit card that charges less interest on balance transfer. Balance transfer credit cards generally have a lower introductory rate for transfers, and 0% intro periods.
- The length of the promotional period – Look for a card that allows you to clear your debt with a long 0% period. There are chances that the rate may increase at the end of the promotional period.
Best Balance Transfer Credit Cards
Here are few of the best balance transfer credit cards that offer you breathing room to pay down your debt.
- Chase Slate®
- Wells Fargo Platinum Visa® Card
- BankAmericard® Credit Card
- The Amex EveryDay® Credit Card from American Express
What are the benefits of a balance transfer?
Transferring your balance means shifting all or part of your .debt from one credit card to another. Transferring your debt to a card with lower interest rate allows you pay less interest on your existing debt. This means that you’ve to pay less interest on your current debt. Moreover, consolidating all of your balances onto one card means you’ve to keep track of one payment a month rather than focusing on due dates of multiple cards.