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Balance Transfer Cards Explained

Balance Transfer Cards

Life as an adult comes with a truckload of responsibilities and plenty of bills to pay. A vast number of individuals resort to taking loans with high interest rates to offset pressing bills while getting into deeper financial crises. 

Paying off a high-interest rate loan can be a bit of a challenge for many people. The quest to find a way out becomes a consuming thought. 

Balance transfer might just be the way out, and balance transfer cards might be right for you. A balance transfer involves the transfer of debt from one credit card to another with a lesser interest rate. 

Important notes about balance transfers:

      • The process of balance transfer begins with the application for a new card with 0% APR.
      • A balance transfer is a good way to knock off high-interest payments. 
      • Not all cards are beneficial for a balance transfer.
      • A balance transfer cannot be made with cards from the same issuer.

What Is a Balance Transfer, and How Does It Work?

The process of balance transfer begins with the application for a new credit card with 0% APR. This process usually takes a while before approval. During the wait, you must know your account number and the amount you intend to transfer. 

The credit card issuer has the option to either place a transfer limit on your card or approve of a full transfer. This can also be determined by other factors such as the issuer’s transfer limit as well as your credit limit. 

Depending on the card issuer, you either pay your debt through the use of a balance transfer check, or your card issuer makes the payment on your behalf. 

As easy as this may sound, a balance transfer is not a quick fix. This process often takes weeks or a couple of months to be successful. It also entails that you pay a certain amount of money monthly into your new credit card. 

Your ability to follow through on this payment greatly improves your credit card balance transfer credit score. Failure to comply puts you at risk of incurring more debt. 

Balance transfer helps you cut down the interest rate on your existing card. You also get bonuses when you adhere to the rules guiding this process. The importance of a good credit card score can never be overemphasized. 

For one reason or the other, you might be wondering, can you transfer someone else’s credit card balance to yours? The answer is yes. Although this might be a risky move to make, some card issuers make this option available. However, this comes with certain conditions that must be met.

Getting a new credit card can be a good way to pay off debt with no interest. However, this can also get you into more debt if you aren’t careful. 

Generally, having more than one credit card affects your credit score. Balance transfers to an existing credit card affect credit scores as well. Since the goal is to get out of debt as quickly as possible, you need to decide on which option helps you achieve this.

Once you’ve completed your debt payment, it is advisable to retain your high-interest rate card but only to be used when necessary. Bear in mind that closing this card will also affect your credit scores. 

Nevertheless, if you find yourself unable to get a grip over your spending rate, then it’s best to close it. 

How to Find Good Balance Transfer Cards

There are several good balance transfer cards made available by card issuers tailored to meet the needs of each individual.

Most balance transfer cards offer 0% APR on credit cards. This serves as a good way to pay off principal debt rather than spending a large chunk of money on interest payments. 

Before you decide on which balance transfer card to opt for, first consider the balance transfer fee, the amount you intend to transfer, and how long it would take to pay off. 

The transfer fee for most balance transfer cards ranges between 3-5% of your balance. Although this is not common, a few balance transfer cards come with a 0% transfer fee. 

Therefore, a good balance transfer card offers:

      • Low transfer fee (0-5%)
      • 0% APR 
      • Welcome bonus
      • Promotional APR

        Best Credit Cards of May 2022

        Milestone® Mastercard®
        Fair Credit

        • Annual Fee
          $99*
        • Regular APR
          24.9%
        • Recommended Credit Score
          Fair/Good
        More details

        Product Specs

        • Regular APR 24.9%
        • Credit Recommended Fair/Good
        • Annual Fee $35 - $99*
        • Intro Rate N/A
        • Intro Period N/A
        • Balance Transfer N/A
        • Intro (Purchases) N/A
        • Intro (Balance Transfers) N/A

        Product Details

        • Prequalify for a card today and it will not impact your credit score
        • Less than perfect credit is okay
        • 24/7 access to your account information, even on mobile
        • Account history is reported to the three major credit bureaus in the U.S.

        Upgrade Triple Cash Rewards Visa®
        Rewards

        • Annual Fee
          N/A
        • Regular APR
          8.99% -29.99%
        • Recommended Credit Score
          (620+) Excellent, Good, Fair, Average
        More details

        Product Specs

        • Regular APR 8.99% -29.99%
        • Annual Fee $0
        • Credit Recommended (620+) Excellent, Good, Fair, Average
        • Return Payment Fee $0
        • Foreign Trans Fee $0
        • Balance Transfer Fee $0
        • Late Payment Fee $0
        • Penalty APR N/A
        • Cash Advance Fee N/A
        • Cash Advance APR N/A
        • Intro (Balance Transfers) N/A
        • Intro (Purchases) N/A
        • Credit Line See website for Details*

        Product Details

        • Earn a $200 bonus on your Upgrade Card after opening a Rewards Checking account and making 3 debit card transactions*
        • Unlimited cash back on payments - 3% on Home, Auto and Health categories and 1% on everything else
        • $0 fees - $0 annual fee, $0 activation fees, $0 maintenance fees
        • Combine the flexibility of a card with the low cost and predictability of a loan
        • No touch payments with contactless technology built in
        • See if you qualify in minutes without hurting your credit score
        • Access to a virtual card while you wait for your card to arrive in the mail
        • Great for large purchases with predictable payments you can budget for
        • Mobile app to access your account anytime, anywhere
        • Enjoy peace of mind with $0 Fraud liability


        • Annual Fee
          N/A
        • Regular APR
          N/A
        • Recommended Credit Score
          (620+) Excellent, Good, Fair, Average
        More details

        Product Specs

        Product Details

Is a Balance Transfer a Good Idea for Me?

If you are trying to pay off debt on one credit card within a short period, then a balance transfer might be the best option. This would also require that you have a good credit score and your credit balance is minimal. 

A balance transfer should be a tool to get out of debt quickly. Consider your financial needs, credit score, and the package each card has to offer. 

A balance transfer should be paid off within the stipulated time frame. Failure to do so can attract a high APR penalty charge of over 20%. 

Seek out means other than a balance transfer if you have a poor credit score with multiple credit cards. 

Five Expert Money-Saving Tips for Picking the Best Balance Transfer Card

As mentioned earlier, a balance transfer is not a quick fix and not as easy as it may sound. To ensure that you apply this tool correctly, below are some money-saving credit card transfer tips

You Need a Good Credit Score

To stand a chance to qualify for a balance transfer credit card, you need to have a good credit score. Find out your credit score health before applying for a balance transfer card

A Balance Transfer Is Not Instantaneous

A balance transfer is not a one-time payment process. This process could take a couple of weeks, and a minimum amount of money is expected to be paid into the new card constantly. 

The 0% Interest Rate Only Lasts for a Short Time

Once your transfer card has been approved, keep track of the promotional time frame and endeavor to pay up before the deadline to avoid getting into a fix. 

The promotional period for most transfer cards ranges between six to eighteen months. While interest rate after the deadline is usually between 14-15% 

Most Transfer Cards Charge a Transfer Fee

A balance transfer card helps you save a considerable amount of money while paying off debt. However, it does not come free of charges. Most transfer card issuers charge 3-5% to initiate the transfer process. 

Your New Card Does Not Come Interest-Free

The 0% interest rate is only applicable to your transfer debt. Any new purchase made with this card attracts a high interest rate, possibly higher than that of your existing card rate. 

Featured Image: Twenty20

About the author: Shaan is a content writer who enjoys creative writing and her career in the marketing field. Shaan also has an educational background in Marketing Management.

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