A balance transfer means moving all or part of your debt from one or more credit cards to another credit card. This is an awesome way to take advantage of a much lower interest rate. You don’t pay off your debt, you are simply transferring it to another card. Let’s look at the benefits of a balance transfer.
Lower Interest Rate
If you are carrying a high balance on a credit card with a high interest rate, this can be one of the leading advantages of a credit card balance transfer. You can pay down your debt faster by lowering the total amount you are paying in interest. This allows you to focus on tackling more of the debt balance each month.
Consolidate Debt from Multiple Credit Cards
Many people are overwhelmed with multiple monthly credit card payments. A credit card balance transfer will allow you to consolidate the balances of several credit cards into one card. Simply your life and finances! You’ll enjoy not only a lower interest rate, but you will also have one convenient monthly payment. You’re able to focus on paying off your debt more effectively.
Get Out of Debt Faster
Paying down your debt quicker is one of the most common reasons people take advantage of credit card balance transfers. The lower interest rate gives you that extra savings needed to pay off your credit card balances faster. Generally, the balance transfer could have a positive impact on your credit history if you are able to pay down your debt faster (improving your debt-to-credit ratio).
Credit Card with Better Terms
In addition to a higher interest rate, your current credit cards might have higher fees, a shorter grace period or other dreadful terms. Who likes that? Some credit cards have transfer, annual fees and come with a short grace period. An annual fee is a yearly charge by financial institutions for use of their credit cards. Generally, you might see some annual fees as low as $35 and others as high as $500 or more. And a transfer fee is the fee charged when you transfer credit card debt from one card to another. They typically add up to 3% or 5% of the total balance you transfer. Your grace period is a set period of time that you have to pay off your balance before you are charged interest. This gives you time after you receive your monthly statement to pay your bill without being penalized.
Which card is the best card for a balance transfer? It depends. Not all credit cards are the same. You’ll need to find the right credit card for your financial situation and goals. Are you looking for a card with a low rate? No balance transfer fees? No annual fees? Telco has the perfect card for you. Check out our Visa Gold card.
If you are trying to figure out if a balance transfer makes sense for you, crunch the numbers using Telco’s calculator – Are Balance Transfers Worth It