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Balance Transfer Credit Card
You will often see offers for credit cards that have a very low rate for balance transfers. This means you can transfer your balance from one card to the new card and take advantage of a lower initial interest rate.
Sometimes these low initial rates for balance transfers will apply for 6 months or a year. Some cards apply the low rate for the life of the balance. Low interest rates will allow your payments to reduce more of your actual debt. So you'll be debt free sooner.
There are two considerations you need to be aware of regarding balance transfer cards:
- Many balance transfer cards require that you have good to excellent credit. They are, after all, accepting your unsecured debt at a low interest rate. This places them at risk, so they limit balance transfers to those they believe are good credit risks.
- Some banks charge a "transfer fee" that is a percentage of your balance. This may simply be another way to collect your money. Instead of charging interest over the course of a low or zero interest rate, they collect their money up front as a "transfer fee.".
You may want to check your credit report before you apply for a new balance transfer credit card, especially cards that require good or excellent credit. Check to see how many negative items are on your report. This will give you an indication of your chances for success.
Check out our Zero Percent Introductory Rate Credit Cards to see how you can take advantage of balance transfers. You'll need to compare up to three cards together to see the balance transfer details.
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