Balance transfer credit cards are an awesome option for those who are unhappy with their current interest rate, or their current lender, or simply want to consolidate their credit card debts into one easy to manage account. These cards are designed to allow consumers to use them to pay off other credit card debts. The process is simple, first, you’ll need to find the balance transfer offer that fits you best. Second, apply for and get approved for the card. Third, call your lender and request a balance transfer.
As with any type of credit card, different offers come with different terms. You may find that some offer promotional interest rates, some charge transfer fees, and some offer rewards, while others don’t. Therefore, when looking for a balance transfer credit card, it’s incredibly important to sift through a few offers and get a good idea of what you want before applying.
What To Compare with Balance Transfer Credit Cards
Promotional Interest Rates – Due to high levels of competition in the balance transfer credit card industry, many lenders started offering promotional interest rates years ago. These are low, often times 0% rates that will generally last anywhere from 6 to 18 months. Although, they aren’t long term rates, 0% for 6 months instead of 18 months could mean that you miss out on hundreds of dollars in savings!
Standard Interest Rates – Once your promotional interest rate expires, you’ll be required to pay the standard interest rate on the remainder of your debt. So, it’s important to not get so excited by whatever promotions may be running that you forget about the standard rates. The bottom line is, no matter how much you plan to have your debt paid off by the end of the promotional period, things happen, and you may find yourself paying the standard rate. That being said, sometimes it’s best to give up 6 months at 0% for a lifetime of 2% to 6% savings.
Transfer Fees – Ahhh, I miss the days of no transfer fees, but those seem to be far behind us at this point. These days, just about every balance transfer credit card will come with a transfer fee. The industry standard is a $15 to $20 minimum or 3% to 5% of the balance being transferred, whichever is greater. In most cases, these fees are absorbed by the savings on interest that you’ll receive, but you don’t want too much of your savings spent on fees do you? That’s why it’s important to look at transfer fees.
Annual Fees – If you find yourself paying an annual fee on a balance transfer credit card, I hate to break the news to you, but you chose the wrong card. There are so many offers out there that don’t charge annual fees these days. Therefore, when you go shopping for a one of these cards, start by avoiding the options that charge annual fees.
Rewards – Most balance transfer credit cards have split personalities these days. On one side, they save you money on interest, allow you to consolidate debt, or switch to a lender that you enjoy rather than one you’re getting tired of. On the other side, many of them also offer great rewards programs. So, if you’ve got a few chosen and you can’t seem to pick one, rewards programs are a great tie breaker.
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