How to Find the Best Balance Transfer Credit Card
Taking advantage of a Balance Transfer Credit Card can be a useful way of reducing your interest rates and ultimately speeding up the process of paying off your debt. Credit Card companies are all competing to own your debt and the incentives are there to follow this approach to debt management. Finding the best card to transfer your balance to can take some time as you will need to research what card will best meet your needs by taking the following steps.
Balance Transfer FeesThe first thing you need to look at when considering a new credit card to transfer a balance to is what the transfer fee will be. Typically these range from 1% to 5%, with some cards even offering 0% balance transfer fees. This fee will be charged on the balance that you transfer to the new card, so a 3% fee card would see you add $300 to the balance if you planned on moving $10,000 to the new card.
How Long Does the Interest Relief Last?The next thing that you need to consider is how long the interest rate reduction on the new card will last. Credit card companies typically offer a grace period of 0% interest after you make the balance transfer. The longer the grace period the longer you have to pay down the debt before higher interest rates kick in again. When looking at the card options available to you it is always important to consider this. If a card has a 3% balance transfer fee and a 12 month grace period, can you pay off the balance within that 12 month period? If you can then this card would be a better option for you than a card with a 3.5% balance transfer fee with a 24 month grace period. The other card gives you double the grace period, but if you don’t need it then why incur the extra half percent fee.
Other Considerations When Looking for a Balance Transfer Credit CardOne thing that can limit the availability of Balance Transfer Credit Card is a poor credit rating. Many companies will only make these offers to individuals with a good credit rating so your options become far more limited if you don’t have one. This makes it very important to ensure that you are making all of your payments on time leading up to when you want to transfer balances. A single missed payment can mean being declined later.
After You Have the CardAfter you've transferred your balance it is important to keep on top of the minimum required payments that are required. If you miss even a single payment many cards will see the grace period end, resulting in your rates going up immediately. Also, you should make sure you will be able to pay off the balance during the grace period or at least pay it down substantially. While rates are published as to what the rate should be after the grace period ends, it is still possible for the company to increase the rates after that. This could leave you piling up debt again if you haven’t taken the opportunity to pay off the balance during the 0% stretch.
Lastly, the whole reason you are getting a Balance Transfer Credit Card is to tackle your debt and try to pay it down quickly. So once you have one of these cards you should be trying to avoid using it as much as possible.