All About Credit Card Balance Transfers

If a person has a good credit history, yet they want to lower the interest rate they have to pay on their credit cards, they could consider getting a credit card with a balance transfer promotion.  What is a credit card balance transfer promotion?  A credit card balance transfer promotion is when credit card companies try to get people to sign up for their credit cards by offering a very low or no APR on balance transfers from an existing credit card.  People respond to the offer by transferring their existing balances onto the new credit card.  If they do not pay these balances before the introductory period ends, they will have to pay them at whatever APR the new credit card company designates.

How can a person know if a balance transfer is right for them?  First, they need to think about their overall debt.  Is it an amount that can be paid off between 6 and 12 months?  If not, they can still take advantage of a balance transfer credit card.  Why?  It’s because they can still pay off a smaller amount of the debt using the new credit card.  While it’s not the complete amount, it is something.  And paying something is better than paying nothing, at least when it comes to building a good credit history.

Secondly, a person must factor in the balance transfer fee associated with the transfer.  A few balance transfer credit cards don’t charge transfer fees.  If a creditor is lucky enough to be graced with these types of credit cards, there will be no upfront fees and no additional fees have to be paid.  Otherwise, a creditor should expect that between $50 to $75 would be charged each time a transfer is made.  The only way to try to limit these fees is by doing a transfer once for a smaller amount of money.

Thirdly, a person needs to pay attention to what their APR will be once the introductory APR ends.  Too many creditors make the mistake of not thinking about this, because they anticipate on paying their balance before interest gets charged.  While this is the ultimate goal, it may not always happen.  If it doesn’t a creditor shouldn’t have to pay more than what they originally did.  So, if a potential balance transfer credit card has an APR that is higher than what a creditor was paying, it should be passed over, unless they are 100% sure they can pay the balance in full before interest is applied.

If used wisely, balance transfer credit cards can be an excellent tool for helping to address credit card debt.  However, people must be careful to accrue too much debt because they think they aren’t being charged anything, which is the case with balance transfer cards offering 0% APR.  If a person is not careful, a balance transfer credit card could make them go into more debt, especially if they make charges on top of any transfers that are made.  Finding the best credit card rates for balance transfers is the key element.  All in all, the key for successful management of a balance transfer credit card involves making a transfer once, and paying it in full quickly.