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As the name says, balance transfers on credit cards implies transferring the outstanding balance of one credit card to another credit card that offer favorable terms as compared to the one you are currently using. While this is a smart move when you have incurred large debts that you are finding unable to repay, there are a few basics about balance transfers that each person should be aware of in order to ensure they don??t end up getting the raw side of the deal.
Choose the perfect credit card
There are a number of credit card lenders offering superlative deals on balance transfers. It is important to read the fine print and ensure they are no hidden charges before you go in for the balance transfer. If you are eligible for the promotional offers, ensure you ask the banks about the details of the promotion period and the introductory rates that you will be offered. Do not forget to check about the interest rates and fees that will come into effect on the expiration of the promotional period. Also, find out if the bank is going to levy fees for the balance transfer despite the promotional offer.
Save significant amount of money
It is imperative to remember that you are opting for a balance transfer on another credit card so you can reduce the current financial burden. Hence, do not leave any stone unturned to ensure you are a getting a credit card that is better than your current one. A good balance transfer calculator will help you determine if you are getting a good offer on the new card and will also give you an approximate amount of money that you can save when you opt for it.
Impact on your credit score
Opting for a balance transfer will definitely have an impact on your credit score. It may pull your score down because the balance transfer is an indicator that you have incurred more debt than you can manage to pay off. Hence, it becomes even more important to choose the right credit card so you can reduce the balance soon and improve your credit score.
Ensure the process is complete
Most of the people are under the impression that the process of balance transfer is complete once the balance is transferred from the old card to the new card. This is, unfortunately, not true. The process of balance transfer is complete only when the balance has been completely transferred and the old credit card is closed successfully. Ensure the new billing statement of your old card clearly shows $0 outstanding balance which is an indicator that the balance transfer has been successful.
Pay off on time
Once the balance transfer is through, it is time to make your monthly payments on time consistently. If possible, consider paying off the entire amount before the introductory offer expires so you can save a significant amount of money. You will not incur any interest on the outstanding amount if the bank has offered you a 0% interest option during the promotional period and pay it off before the offer expires.