Be sure to make regular payments on all of your existing credit cards until you have confirmed that your balances have transferred in full and any final interest charges have been paid off. Balance transfers are best for those with a lot of high-interest debt to pay down. By moving debts to a new credit card that extends a 0 percent APR for a limited time, you get the chance to save money on interest and pay down the balance at a much faster pace.
That said, some people take out balance transfer credit cards with good intentions but find themselves racking up new balances on their credit cards even as they work to pay their old balances off. At the end of the day, your success with a balance transfer credit card depends largely on how you use it and how prepared you are for the debt repayment process.
A balance transfer could, in fact, improve your credit score. Your credit utilization ratio, which compares your available credit to your current debt, makes up 30 percent of your credit score. If you make regular monthly payments on your transferred balances without taking on any new debt, your credit utilization ratio will continue to go down—meaning your credit score should continue to go up.
Picking the right card for a balance transfer takes a little time, but the process could help you avoid false starts and missteps along the way. Requesting a credit card balance transfer is relatively simple. Once you have found a balance transfer card with terms you are happy with, you should take the steps required to apply. This involves sharing basic personal and financial data such as your name, address, Social Security number, employment situation and income. When you apply online, you may also have the chance to initiate your balance transfers right away.
This typically means entering the credit card numbers and account information for each balance you want to transfer, as well as the issuing bank and its mailing information.
Once your balance transfer is underway, keep in mind that it can take one week or up to a month for your balance transfer to be complete. The balance transfer process can vary slightly by issuer. The following guides can help you transfer balances without any problems:. While your balance transfer card might give you an introductory 0 percent APR for up to 21 billing cycles, all good things come to an end. After all, paying down balances is infinitely harder if you continue to work against your goals by using your credit card for purchases.
Figuring out what a balance transfer is could be the first step to becoming debt-free, but do your research first. For example, you should compare all the top balance transfer credit cards on the market today and go through all your bills to find out exactly how much you owe and to whom. How We Make Money. Written by Holly D.
Written by. For more information, see our Editorial Policy. When you use a balance transfer credit card, you can save money by transferring an existing credit card balance to a new card that charges low or no interest for a period of time. Here's what's important to know about balance transfer credit cards. The goal of a balance transfer is to save money on interest while you pay off credit card debt.
You can move a credit card balance to a new card, but typically, you're not allowed to transfer a balance from one card to another that's issued by the same company or any of its affiliates. Beyond credit card debt, you may also be able to move other types of debt, like personal loans, directly to a balance transfer credit card. Or the card issuer may provide paper checks you can use to pay off balances on other accounts, like auto loans or home equity lines of credit HELOCs.
The amount you pay with the check will then be added to your balance transfer card balance and accrue interest at the promotional annual percentage rate APR. For 18 of those months, you'd pay interest. If your interest rate after the promotional period increased to Rates and Fees. A balance transfer might also be a good option if you can find a card with no balance transfer fee or the amount you'd pay in fees wouldn't cut notably into your savings. In the right circumstances, a balance transfer can be a ticket to freedom from overwhelming debt, or a meaningful step in that direction.
Need to consolidate debt and save on interest? The purpose of this question submission tool is to provide general education on credit reporting.
Numerous such offers are advertised in the market. If you use the card to make new purchases, be aware that you may incur interest on those charges from the day you make them, rather than getting the interest-free grace period that you normally receive when you pay off your purchases in full, on or before the billing due date.
The fact of the matter is that not all credit cards are created equal, and some balance transfer cards are better than others. Accessed June 2, Consumer Financial Protection Bureau. Wells Fargo. Balance Transfer Cards. Building Credit. Credit Cards. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content.
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Develop and improve products. List of Partners vendors. If you make only the minimum payment each month, it will take you longer and cost you more to clear your balance. Balance transfer requests are subject to eligibility and security checks, but these will not leave a footprint on your credit file. Once the balance transfer has been processed you cannot cancel it and any fees cannot be returned. Keeping promotional rates - to stay eligible for any promotional rates that go with your balance transfer, you must always stay within your credit limit, and make your payments on time each month.
Payment allocation - any payments you make will be used to pay off amounts on which we charge the highest rate of interest first, then the next highest rate, and so on down to the lowest rate of interest. Please check your terms and conditions for more info on how we apply your payments. Other borrowing options - before asking for a balance transfer it's worth considering other ways to borrow, as well as any savings you may have, as these could be better options for you.
Follow these tips to make sure your credit score is as healthy as it can be:. For more information on improving your credit score, take a look at our guide.
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