Initiate the balance transfer. Sometimes, balance transfers can also be initiated using convenience checks , or the checks issuers send you in the mail. Before using one, though, read the terms to find out if it will count as a balance transfer and what your interest rate will be. Wait for the transfer to go through. Once the balance transfer is approved, which could take two weeks or longer, the issuer will generally pay off your old account directly.
That old balance — plus the balance transfer fee — will show up in your new account. Pay down the balance. The goal of a balance transfer is saving money, so you want to choose a card that helps you minimize your costs. The ideal balance transfer credit card comes with three big zeroes:. With such a card, you could potentially pay off your debt without spending a penny on interest and fees.
Cards without transfer fees are rare nowadays, however, so you're likely to find only two out of three. Make sure the card you apply for offers this.
And if you want a higher limit and don't mind paying some interest, a personal loan could be a good match; you can pre-qualify for one to see how much you could borrow and what interest rate you could get before accepting an offer.
Such a card could save you plenty on interest, giving you an edge when paying off your balances. Will a balance transfer hurt my credit score? Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights.
Measure content performance. Develop and improve products. List of Partners vendors. While this offer looks great on the surface, people who take advantage of it might find themselves on the hook for unexpected interest charges. A balance transfer involves moving outstanding debt from one credit card to another card—typically, a new one. Next, decide which balances to transfer; cards with high interest rates should come first. There also will be a transfer fee that is charged on making the balance transfer.
If there is an amount cap on the fee, then it can make transferring a larger balance worthwhile. Be sure to check the credit limit on your new card before you initiate a transfer, as your requested balance transfer cannot exceed the available credit line—and balance transfer fees count toward the limit. Balance transfers can be done with balance transfer checks provided by the issuer of the card to which the balance is being transferred.
You simply make out the check to the card company that you want to pay. Some credit card companies will let the cardholder make out the check to themselves, but make sure this will not be considered a cash advance. Alternatively, the transfer can be done online or by phone. In those cases, you contact the credit card company to which you are transferring the balance. By law, it must be at least 21 days. At that point, the only way to get the grace period back on your card and stop paying interest is to pay off the entire balance transfer and any new purchases.
You just charged the purchase to your card for convenience. The rules governing this process are spelled out in the fine print. Credit card companies used to routinely apply payments to the lowest-interest balances first, in which case any amount over the minimum payment would go toward the balance transfer amount, and any purchase balances would keep sitting there accruing interest at the higher interest rate until paid off. However, with the advent of the Credit Card Act of , issuers must first apply payments above the minimum amount due to the balance with the highest interest rate.
You can avoid paying any interest during the promotional period, which may range from six to 21 months. Typically, credit cards separate the balance transfer interest rate from the purchase interest rate.
Where you might run into problems is when the promotional APR for purchases expires before the promotional APR for balance transfers does. This practice is not uncommon among credit card issuers. We found similar policies at Citibank and Chase, to name a few. Some balance transfer credit cards reserve the right to cancel your promotional interest rate if you make a late payment or miss a payment altogether.
Some cards may charge a variable penalty APR of up to If your payment is returned for some reason, your credit card issuer could consider it a missed payment and end your promotional interest rate. This could also trigger a penalty APR on your entire balance.
Balance transfers can help responsible borrowers pay off debt. So were we.
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