How to make a balance transfer
A balance transfer can be a valuable tool if you are struggling with high interest rate debt. Many credit card issuers offer balance transfer cards with interest-free introductory periods that allow you to transfer various credit card debt to a new credit card and use the introductory period to pay off whatever. you owe without interest.
With the right balance transfer credit card and the right 0% APR introductory offer, you have the flexibility to pay off your transferred balances in full while temporarily avoiding expensive interest charges.
But first, you probably have some questions. How do you transfer a credit card balance? How do I choose the right balance transfer card? Here are the answers that can help you get the job done in five steps:
- Make sure a balance transfer is the right plan for you
- Compare balance transfer credit cards
- Prepare for the application process
- Transfer a balance to the new credit card
- Create a debt repayment plan
1. make sure a balance transfer is the right plan for you
A balance transfer credit card will work best if you have high-interest debt and need more time to pay it off. Before you begin, take a close look at your situation to see if you are in the right position to make a balance transfer.
Is the debt you want to transfer less than $ 10,000?
A balance transfer is ideal when it involves less than $ 10,000 in debt, whether it’s on a single credit card, multiple cards, or different types of credit accounts. Typically, you can’t transfer a balance above your credit limit, and $ 10,000 is on the high end for most consumers. If your debt is over $ 10,000, you have two options:
- With multiple debts, you can prioritize the largest with the highest interest rate for balance transfer
- With large debt, you can transfer as much as you can to the new card
Either way, diligently paying off the balance that you are able to transfer could help you save money on interest charges.
Do you have a good credit score?
Qualifying for a prime balance transfer credit card is usually easier if you have a good or excellent FICO score (between 670 and 850). You may still be able to find a balance transfer credit card with a credit score below 670, but it will likely have a shorter introductory APR period. Check your credit score before you start shopping to get a better idea of which cards you may be eligible for.
Learn more: How Does a Balance Transfer Affect Your Credit Score?
What are the possible alternatives?
Like many things about your personal finances, balance transfers have their pros and cons. If your debt amount, credit score, or both don’t match ideal terms, you might consider:
- A personal loan. A loan will not have a zero rate introductory offer, but it might be easier to qualify with less than perfect credit.
- A bad credit balance transfer card. While you might get a shorter, low-interest introductory offer rather than zero-interest rates, you’re still likely to find the terms more favorable than your current high-rate debt.
2. Compare balance transfer credit cards
You can do all or most of your comparison shopping online by visiting the websites of credit card issuers and marketplaces. Another option is to check with your bank or credit union.
Here are a few things to look for when comparing balance transfer cards:
- Duration of the introductory APR offer: Most balance transfer cards offer 0% interest for over a year. The longer this temporary interest-free window lasts, the more you can avoid expensive credit card APRs. Also, note the regular APR for each card, as your interest rate will convert to that rate once the introductory APR offer ends.
- Types of debt you can transfer: Most balance transfers involve transferring debt from a credit card to a new card, but some issuers allow you to transfer from multiple cards. You may also be able to transfer balances from different types of credit accounts, including cards, car loans, and student loans, although this is less common. Check the card’s terms and conditions to make sure it can accept the type of debt you want to transfer.
- Balance transfer fee: Some balance transfer cards charge an upfront fee of 3-5% of your balance. This means that if you transfer $ 5,000 of debt to a balance transfer card, you will pay an additional $ 150 to $ 250. A few credit cards do not charge a balance transfer fee, although these free transfers often result in a shorter APR introductory period.
3. Prepare for the application process
You can apply for a balance transfer card online in minutes. You will need to provide some basic personal and financial details such as your name, address, social security number, and income.
In some cases, you can begin the process of transferring balances as part of your request. The balance transfer credit card app may ask you what balances you plan to transfer to the new card, so make sure you have that information handy.
After applying for your new balance transfer card, you can usually get a response within minutes. If you are not immediately notified of your approval, you may have to wait for an email from the credit card company. Learning that your credit card application is “pending” or “under review” can be scary, but be patient – in most cases, you will receive a response from your credit issuer within a few days.
4. Transfer a balance to the new credit card
Once your balance transfer credit card application has been approved, it’s time to transfer the balance. While each credit card issuer’s balance transfer process is slightly different, in most cases you will be able to transfer your balances over the phone or online.
The process of transferring a balance is generally easy. All you need to do is provide some basic information about the credit cards you plan to transfer balances from, including card numbers and amounts you want to transfer to your new credit card. If you need additional help learning how to transfer a credit card balance, check your credit issuer’s online resources or call customer service for assistance.
Keep in mind that balance transfers take time. It can take between a week and a month to transfer your balance. It is important to continue making payments on your old cards until your balances have been fully transferred to your new 0% APR credit card. After your balance transfer is complete, be sure to follow up with your old cards and loans to make sure they show a balance of $ 0 before you stop making payments.
Credit Card Issuer Balance Transfer Guides
5. Create a debt repayment plan
Now is the time to make good use of the introductory offer. Having a little time without any interest puts you in a great position to eliminate your high rate debt. The more you can invest in your transferred balance each month, the faster you’ll get out of debt. Remember that every dollar you pay during your 0% APR period has a greater impact since 100% of it is spent on the balance you owe, not on interest payments.
Take a look at your monthly budget versus your salary – cash out for cash in – and identify any areas where you can cut spending, at least temporarily. Controlling spending will help you get your current debt under control, and developing this healthy habit should help keep you from getting into debt in the future.