What Are Alternatives To A Balance Transfer
If you’re not sure a balance transfer is the right option for you, a personal loan can be an alternative. Much like balance transfer offers, the personal loans and interest rates that you qualify for will depend heavily on your creditworthiness, but some people may find personal loans offer a better interest rate for the long term.
Disclosure: This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.
Figure Out How Much You Can Afford To Pay Back Each Month
Now that you know how much debt youre in, you need to figure out how much you can reasonably pay each month. This is where a monthly budget can come in extremely handy. Get out your monthly budget and find out how much income you can set aside specifically for debt repayment. Since you were already paying the minimum balances on your cards, you should be able to set a hefty chunk aside to throw at your new 0% APR balance every month.
Faqs About Balance Transfer Credit Cards
How do you transfer credit card balances?
You can request a balance transfer by applying for a new balance transfer credit card online. Credit card companies can also mail out balance transfer checks, which you can use to transfer a balance from one card to another.
What is the best balance transfer credit card?
The best balance transfer card is ultimately the one that offers the best terms for your financial situation, based on your creditworthiness.
What happens when you transfer a credit card balance?
When you transfer a credit card balance, the balance is shifted to a new card. You then make payments to the new card, while the original card remains open unless you decide to close it.
How long does a balance transfer take?
Balance transfer processing times can vary from one credit card company to the next. For instance, some may be able to complete a transfer in five to seven business days, while others can take up to three weeks.
What happens to your old credit card after a balance transfer?
Your old credit card doesn’t go anywhere. It remains open unless you decide to close it. Keep in mind that closing a credit card, even one with a zero balance, could knock points off your credit score.
How do balance transfers work?
Should I transfer my credit card balance?
Can you transfer a loan to a credit card?
Can you do a balance transfer with bad credit?
How does a balance transfer affect your credit score?
Can I transfer someone else’s credit card balance to mine?
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How Do You Transfer A Balance To A 0% Intro Apr Credit Card
A 0% APR balance transfer offer means that the 0% balance transfer card issuer pays off the outstanding balance on your old account, and then adds this same balance to your new balance transfer card, so you will now owe the balance to your new credit card issuer. This means you could save money on interest when you transfer high interest debt.
The introductory rate will typically only last for a few months, and then the balance will accrue interest at the higher standard APR. Many credit cards that promote other rewards also offer 0% intro APR balance transfers.
Before you take action, consider these guidelines to help inform your usage of a 0% intro APR balance transfer:
How Long Do Balance Transfers Take
The time it takes to complete a balance transfer will vary by card issuer, but generally you should expect the process to run anywhere from a few days to several weeks. To avoid any unpleasant surprises, its a good idea to contact the issuer before initiating the transfer and confirm exactly how long the process will take to complete. If youve only recently opened the account, that could have an impact on your wait time.
On the lower end of the waiting scale, Capital One balance transfers can take as little as three business days, while Citi can take up to 21 days. See our comprehensive guide to balance transfer processing times by issuer.
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Common Mistakes To Avoid
While using a 0% APR balance transfer strategy can be very powerful for reducing debt, there are a few things to watch out for.
The first is adding purchase charges to your balance transfer card. If you read the terms and conditions that come with your balance transfer card, you may find that your monthly payments get applied first to purchases you make before being applied to the balance youre trying to pay off. This can undermine your intentions of paying off the balance before the end of the introductory period.
The second thing to look for is balance transfer fees. Be prepared to pay between 3% and 5% of the amount you transfer as a fee. This amount is added to the total amount you will owe and lowers the total amount you can transfer. Most will not allow you to transfer more than your credit limit and they will apply the balance transfer fee first.
For example, if your limit is $5,000 and you have a 5% balance transfer fee, you wouldnt be able to pay off a full $5,000 worth of other debts as a $250 fee would be added to your balance, putting you over the limit.
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Balance transfers dont hurt your credit score directly, but transferring a balance can indirectly cause credit score damage. When you apply for a balance transfer credit card, for example, it will generate a hard inquiry on your credit report, causing a slight dip in your credit score.
If you transfer a balance to an existing credit card account, however, there is no hard inquiry and no credit score damage. A balance transfer could still result in high credit utilization, though, and allow you to rack up more debt than you can afford to repay. Both of those things can hurt your credit score.
So, the act of transferring a balance itself wont affect your credit, but it will indirectly alter several key components of your credit profile, from utilization to the age of your accounts. These changes might lower your score a bit in the short term. But over time, interest savings and the ability to pay off your debt faster should make transferring a balance a net positive for your credit score.
You can use WalletHubs free credit score simulator tool to get a sense of how a balance transfer might affect your credit score.
How Balance Transfers Can Help or Hurt Your Credit Score
- Long Intro APR: BankAmericard® credit card
The BankAmericard credit card has an intro APR of 0% for 21 billing cycles for any balance transfers made in the first 60 days. The cards regular APR is 14.24% – 24.24% Variable. There is also a 3% balance transfer fee.
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% Interest On A Balance Transfer Credit Card Is Temporary
The introductory 0% intro APR balance transfer rate is temporary. The duration of the introductory 0% APR balance transfer offer varies based on individual offers. After this introductory period, the remaining transferred balance is subject to the cards standard interest rate. You should pay attention to the duration of the introductory offer because, once it is over, there will be an increase in your interest rate.
It is always important to familiarize yourself with the terms and conditions for any . For example, in some cases, new purchases on cards with an active 0% intro APR balance transfer offer will incur interest at the standard purchase APR, unless the 0% intro APR offer applies to new purchases as well. The amount transferred through such 0% intro APR balance transfer offers is often subject to a one-time balance transfer fee. This fee is added to the new balance.
Alternatives To Balance Transfers
If you’re not sure that a balance transfer credit card is the best option for you, consider these alternatives:
Personal loans for debt consolidation
By paying your debts with a personal loan, you’ll have a fixed loan term, payment amount, and interest rate. Consolidating debt is a great way to ensure you can afford your monthly payments and get your debt paid off in full. Even though debt consolidation loans don’t offer 0% intro APRs, you can find personal loans with low interest rates. You also won’t need to worry about the APR going up like it does with balance transfer cards at the end of the intro period.
Home equity loans/home equity lines of credit
Since a home equity loan or a home equity line of credit uses your home as collateral, they tend to offer some of the lowest interest rates you can find. Either is an affordable way to pay off debt, but you will need equity in your home to qualify. The fact that your home is the collateral also adds to your risk.
Nonprofit credit counseling agencies
When you work with a credit counseling agency, it can give you advice on how to budget and pay back your debts. A credit counseling agency can also negotiate a debt management plan with your creditors. This option can be especially helpful if your credit isn’t the best, as it’s hard to find balance transfer credit cards for bad credit.
Negotiating your credit card debt
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The Ultimate Guide To Paying Off Debt With A Balance Transfer Credit Card
Now that you know all about the various balance transfer credit cards available, its time to formulate a plan that will help you get out of debt and stay out. Digging your way out may not be easy, but with a balance transfer credit card, youll be able to get out of debt faster and save money along the way.
Here are the steps you need to take right now:
Can I Use A Balance Transfer Credit Card To Buy Things
While a balance transfer credit card certainly works like a normal credit card, it’s generally not a good idea to use it to make new purchases. If you currently have credit card debt, your primary goal should be to get out of debt and avoid paying interest. When you purchase something and add new charges to your balance transfer account, you’re moving in the wrong direction, especially if you’re only able to make the minimum payment.
A debit card or cash is better for any new purchases while you pay off your debt, thus leaving your balance transfer account only for debt repayment. This will also help you track your progress more clearly. And keep in mind that some balance transfer credit cards still charge interest on new purchases until you pay off the entire balance , which will only compound your debt problem.
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Does The Card Have Long
Some of the best balance transfer cards offer general benefits to cardholders, such as extended warranties on purchases and identity theft protection services, as well as rewards programs that can help offset interest payments or provide additional discounts or savings on purchases. If you want to use your card for daily purchases like gas or groceries, you may be able to earn points or miles that may be redeemed for gift cards, statement credits or more.
You can search for preapproval options using tools like CardMatch by Bankrate and get a glimpse of what you could feasibly be approved for without the consequences of a hard credit pull.
What Does A 0% Balance Transfer Offer Cover
A credit card might offer a 0% balance transfer rate that lasts years. But it might only offer a few months of interest free spending.
Generally, its better to have your balance transfer credit card just for balance transfers. But its worth knowing what rates youll be paying for spending on it too, just in case you need to.
If you have a large debt to pay, try to avoid spending on the card after transferring a balance to it.
Or if you’re looking for a card that offers a good rate on both, you might want to consider a 0% balance transfer and purchase credit card.
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Credit Cards With The Longest 0% Apr Balance Transfer Period
Last updated Oct. 12, 2022| By Robin Kavanagh
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Who likes paying interest? Nobody! Yet, thats exactly what we sign up for when we open a credit card or take out a loan. Its the compromise we make for being able to have spending power to cover lifes expenses right when we need it. But even though we commit ourselves to paying interest, that doesnt mean we cant minimize how much we end up paying by the time we satisfy a debt.
This is where balance transfers can be a big help. You can transfer your high-interest debt from an older credit card to a 0% APR credit card that offers 0% interest on balance transfers. Then you make payments during the introductory period to reduce or pay off the debt, potentially saving thousands of dollars in interest over many years of payments. Even if you cant pay off the whole balance in the allotted 0% APR timeframe, your savings can still be huge.
Here is how balance transfers work and four of the longest balance transfer credit cards with a 0% introductory APR period.
Balance Transfer Best Practice
- If you can pay off the debt balance you have transferred before the 0% interest period finishes, you’ll slash the costs of your debt. The most popular approach is to pick the card that offers the longest interest-free period.
- Don’tadd new debt to the credit card balance – this will defeat the purpose of the balance transfer and risk leaving you worse off than before you applied for the balance transfer.
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What Is A 0% Balance Transfer Credit Card
A balance transfer credit card can help you pay off your debt by transferring existing card balances to a new credit card with a 0 percent intro APR period. During that time, you have the chance to pay off the principal without paying interest. When the intro APR period ends, interest will apply to any remaining balance at the end of each billing cycle like a regular credit card.
Want to learn more? Read our full guide on how balance transfer credit cards work.
Alternatives To A 0% Balance Transfer
Maybe a balance transfer card isnt right for you. There are other ways to get a handle on your debt.
1. Pay more than the minimum due
Your minimum monthly payment due is the absolute least you can pay without incurring a penalty. It won’t get you very far toward paying off your debt. To see real interest savings, you need to pay interest on less money, and that means reducing the principal by paying more than the minimum.
2. Use a debt payment calculator
Debt payment calculators show you how much you could save in interest by paying down your credit card balance without a transfer. Enter your balance and choose an interest rate, then see your savings if you reduced the balance by 5% to 50%. See the calculator here.
3. Ask if you qualify for a lower rate
If your credit score has improved since you opened the account, it could pay off to ask your issuer to lower your interest rate. You might get some points knocked off your rate, or possibly get your account moved to a card with a lower rate. You may also be told its not possible, but its worth a phone call to ask.
5. Consider a personal loan
A personal loan can be a solid option to get a handle on your high-interest debt. Personal loans can be issued by banks, credit unions and online lenders. Some loans designed for debt consolidation can even be paid directly to your creditors, streamlining the process.
» MORE: Where can I get a personal loan?
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Best 0% Balance Transfer Credit Cards
Credit card issuers offer intro APR rates and other limited-time offers as a way of enticing consumers to apply for their credit cards. History has shown that this tactic works.
Banks change their promotional offers regularly, based on the competition and current financial environment. If you find an offer that you really like, you may want to consider jumping on it as soon as you are ready. Below are our top-rated 0% balance transfer cards:
In your review of the best 0% balance transfer credit cards, consider the balance transfer fee you may have to pay to initiate the move. This typically equates to a percentage of the total amount of money you are moving to the new card.
The average balance transfer fee is approximately 3% to 5% of the transferred funds. While that may sound steep, it is actually very little when compared with how much you can save when you do not pay interest of 17% or more over the life of your promotional offer.