Taking advantage of a balance transfer credit card is one of the best ways to consolidate debt from other high-interest cards. It will allow you to transfer debt from other accounts. In most cases, it features zero-percent APR for a limited period, which can range between twelve and twenty months.
Since it is simple to reach a significant debt with your credit card, especially since the average interest rate is higher than ninety percent, as a result, numerous people across the US have problems with debt, meaning the interest will accrue and affect the balance for years, leaving you with potential repaying problems.
If paying the debt by following regular ways is impossible, you should know that the balance transfer card can help you throughout the process. When you transfer to it, you will start saving money from significant interest. At the same time, the money you spend on payments will help you reduce the principal.
That is why a balance transfer card is a valuable tool that will help you get out of debt with ease. Still, you should learn everything about it before making up your mind.
How Does Balance Transfer Credit Card Work?
As soon as you apply for it, you will get an indication of which balance you can transfer the moment you get it. The next step is entering the account number from other cards you wish to transfer as well as the amount you plan to move to it. If you wish to complete the transfer, you must pay a transfer fee, which is between three and five percent on the amount you transfer.
You must wait between one week and a month for the balance to enter a new card with a zero-percent interest rate. We recommend you make regular payments with current cards until the balances transfer completely, meaning you can rest assured and prevent potential interest from affecting your situation.
Remember that this credit card will allow you to move debt from high-interest cards and consolidate them into a single debt you can handle with ease. Of course, you can move other debts as well, including personal and car loans.
Everything depends on an issuer, but you can transfer different debt options without using an internal account. Before you make up your mind, you should confirm that you can handle the existing debt with the new card.
Advantages of Balance Transfers
Disadvantages of Balance Transfers
Should You Take a Balance Transfer Card?
Suppose you have a large amount of debt on one or a few high-interest cards that you cannot control properly. In that case, taking advantage of this option with a no-interest introductory period will help you save money on accruing interest.
According to statistics, at least half of users carried balance at least once during a one-year period. Therefore, balances are continually increasing, which means you can prevent themfrom happening by handling each step along the way.
As you can see, zero-percent introductory options are perfect for handling high-interest debt. Moving them into a new one will help you prevent further expenses, while you will get a chance to save money and pay down everything faster.
Some people have issues with overspending, meaning they end up with new balances on the past cards when they transfer the balances. Therefore, you should be ready to commit to paying the debt without taking additional funds. If you cannot help yourself, then the balance transfer card is not for you.
The only success of using it is if you wish to repay the debt during the introductory period, which will prevent future problems from happening. However, if your debt is more significant than the new credit limit because you need a longer payoff plan or have a low credit score, you can choose other means to consolidate debt, such as a personal loan.
Although you will not get the zero-percent APR with a personal loan, the interest rates are lower than credit cards. That way, you will reduce the chances of a vicious debt cycle, which is important to remember.
Determining whether you should get it or not is the first step towards freeing yourself from excess debt. However, you should research around and check for different issuers, terms, and conditions that apply to each option.
The market features a wide array of options, meaning you should compare them and choose the one that will meet your needs. That way, you can face the situation head-on and implement a strategy that will help you pay off everything in a timely manner. However, you must be honest with yourself.