How Does a Balance Transfer Credit Card Work?
Read Our Helpful Info Below to Find Out

    balance transfer credit cardTypically, a balance transfer credit card is a card which you can use to repay what you owe on your existing credit cards, by transferring the balance from your existing cards onto the new card.

    Usually, the card you transfer the balance to has a lower rate of interest, compared to your existing cards, therefore saving you cash on interest fees. Often, credit card firms use balance transfer cards as a means of attracting new customers.

    Some of these cards are offered to existing card owners, but this is quite rare. These cards provide an extremely low (and sometimes zero) rate of interest for six to twelve months when you transfer the balance from your other credit cards.

    After you have applied and been approved for a balance transfer card, you can start enjoying the benefits. For example, lets say you have a $4000 balance on your old card, and that you are being billed 12.68% interest on this. You sign up for a balance transfer card that has a 0% rate of interest on balance transfers for twelve months.

    Now, you can ask your new card company to transfer the $4000 you owe from your old card. Your new card company will pay off $4000 to your old card company, and you will owe $4000 on your new card at 0% for twelve months. You pay $355 towards the balance each month. Thus, you save $260 in interest fees by transferring the balance to your new card.

    If you expect to repay the balance within a year, you ought to search for a balance transfer card with a low rate of interest on balance transfers for twelve to fifteen months.

    If your credit rating is good, then numerous credit cards with 0% balance transfer rates for six to twelve months are available. Always check the balance transfer charges, the average is about 2.5% to 3%. A few cards will waive this balance transfer charge for a limited period.

    If you cannot repay the balance within twelve months, then an alternative option is to change to another balance transfer credit card once the promotional period (normally six to twelve months) is over.

    The majority of card companies will not accept you if you have an existing card with them, or if you have been a card holder with them over the past eighteen months. Thus, it would be wise to cancel your card once the promotional period is finished, so you will have an improved chance of getting accepted when you reapply.

    If you have a big unpaid balance on an existing credit card, then a balance transfer credit card might be the perfect option for you. A balance transfer card can be a great way of reducing your debt from credit cards and lowering your monthly payments, particularly in the present economic crisis.

    Just remember that moving your debt off one credit card, and onto a balance transfer credit card, will not make the balance disappear. Also, always read the credit card company's terms and conditions, to avoid any hidden charges.

Do you have great credit? Take advantage of one of our Credit Cards for Good Credit here!

Credit not so good? Don't Worry!--We have just the right credit card to Rebuild and Restore Your Credit here!