For a consumer who finds themselves in a hole of credit card debt, they may consider a balance transfer. The average US consumer is bombarded with many credit card balance transfer offers on a daily basis most times. For those who have never taken advantage of such an offer, there may be many questions. Find the best balance transfer offer that will benefit you the most financially.
A balance transfer is simply taking a high interest credit card balance and transferring it to a lower interest rate card. Most cards for good to excellent credit offer a 0% APR for a special promotional period. The 2 most common promotional periods are either 12 or 18 months; however, they do go as low as 6 months and as high as 24 months depending on the card and the specific offer. The better the consumer’s FICO credit score is the easier it is to find a great offer. Get a longer term than necessary if possible. This will allow for rough months in case not as much is paid as originally planned. This ensures that a second balance transfer is not needed.
Opening a new credit card typically will offer a better promotional balance transfer APR than using an existing line of credit. This is because the card company really wants the business; as a result, they are willing to extend better offers to new clients. There are several ways to locate current offers. Checking online is often the easiest as multiple cards can be compared side by side. If there is a specific financial institution that is preferred, call the customer service number and ask for their current promotions. Many retail chains will offer an extended “same as cash” for new purchases. Some balance transfers offer a 0% APR while others offer a drastically reduced rate. The most common reduced rate is 2.9%; however this can vary from 1.9%-6.9%.
Balance transfers, especially 0% APR offers, are not always a free and clear ticket to paying off debt. Most (not all) transfers come with one time origination fees. Although the fees may vary by card, the most common transfer fee amount is 2-3% or $5.00 whichever is greater. Because fees can vary so greatly, it is essential to read all the fine print before signing up. Having to change a credit card partway through due to unfavorable terms will not benefit the consumer financially as another balance transfer fee will have to be paid.
If done right, a balance transfer can potentially save the average consumer hundreds of dollars in the long run. Like everything to do with credit, it needs to be used responsibly. Read reviews of credit cards to ensure you balance transfer to the best card to benefit you the most financially.