Balance transfer credit cards are a great tool to pay off debt. I did not use a balance transfer card while I was paying off debt though it was something I considered. If you’re looking to save money on your debt repayment efforts, consider some of the tips below to find the best balance transfer credit cards.
Why Would You Get A Balance Transfer Card?
There are several reasons why many want to work with a balance transfer card though the main reason is they usually allow you to cut down on the amount of interest you pay on your debt. Don’t have debt but need to make a large purchase in the near future? A balance transfer credit card is an option to consider to avoid interest payments. For our purposes, we’ll be looking at it from the debtor angle.
Let’s start with an example. Consider you have $10,000 in credit card debt. The card itself has a 20 percent interest rate. If you stay with the current card, you’ll pay $166 per month on interest alone. That’s a lot of money! Now imagine you have the ability to move that $10,000 to a card that offers a 0% APR for 12 months – you’ve instantly saved $2,000 in interest! Balance transfer credit cards are also a great option to consolidate credit card debt if the debt is on multiple cards, so you only have one payment to make each month.
Where Can You Find A Balance Transfer Credit Card?
Make sure to do your research before choosing a balance transfer credit card. You want to find one that fits your specific needs. I’ve found one of the best ways to research different rewards credit cards is by going directly to the given bank’s website. The major card issuers – Chase, American Express, Citi, etc. have portions of their sites devoted to specific card categories. You can find all the pertinent information on the cards in one place.
What to Know About Balance Transfers
Keep in mind that a balance transfer credit card should not be a quick fix for a debt problem. If you’ve done nothing to break the cycle of debt, the problem will not be solved. That being said, there are several things to keep in mind when looking for a balance transfer card:
- Most balance transfer cards have a fee to transfer the debt. This usually ranges from 3-5% of the amount transferred.
- Most balance transfer cards require good to excellent credit. Less than stellar credit might hold you back from taking advantage.
- The 0% interest applies for a certain period of time. In most cases the benefit lasts for the first 12 months; some cards like the Discover it® card offer 18 months. This is an introductory offer, and the rate will reset at the end of the period.
Some balance transfer credit cards may have other fine print though the above three are the most important to keep in mind.
Using a balance transfer credit card can be a great way to pay off debt quicker. Less interest means more money applied to the principal. Thus, your payments work harder. This only works if your attitude has changed towards debt. A balance transfer credit card is not a quick fix, rather a way to achieve better long-term financial health. If that’s your attitude, a balance transfer credit card is a great idea.