When should you opt for a balance transfer and when not to?

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Balance Transfer Cards » When should you opt for a balance transfer and when not to?

When should you opt for a balance transfer and when not to?

The content is accurate at the time of publication and is subject to change.
Balance transfer means to pay off the debt of one credit card with another credit card. It was originally for customers to pay off debts on their credit cards without really getting rid of their outstanding balance. A lot of credit card issuers now, are using it as a great way of attracting credit card customers from other companies to use their credit cards. This is accomplished by offering some incentives with the balance transfer. When to go for balance transfer? It depends a lot on your credit history, because, better the credit rating, better are the terms of the balance transfer that you get from your credit card companies. When you have a high outstanding balance, and are worried about the interests constantly accumulating, you need to look at these balance transfers. The rule of thumb is to ensure that you benefit from the balance transfer in the long term. Balance transfer offers come with 0% introductory offer, which means that credit card customers can avoid paying high interests on their outstanding balance. This offer would be highly beneficial if the introductory period lasts long enough. Only then will your savings on interest be sizeable enough to justify a balance transfer. A lot of credit card companies base this on the credit rating of the individual, which is why one must be clear about the terms and conditions of the new card. The other criterion is to make sure the APR on the new credit card is not higher than the older one. In the long run, a lower APR will not threaten as much as a higher interest rate, especially, if you don`t pay all the outstanding balances before the end of the introductory period. When not to go for balance transfer? There are certain scenarios where a balance transfer is to be avoided strictly. One of those cases is when a high balance transfer fee is involved. In that case, the balance transfer will reduce the savings made through the 0% interest offered. If the balance transfer is higher than 3-4% on an outstanding balance which is on the higher side, you are better off avoiding the balance transfer. Some credit card companies offer lower credit limit. If you are planning to move fully from one credit card to another to avoid overspending, the new credit limit should be higher than the older card`s credit limit. A lower credit limit will bring down your credit rating. Some card issuers, mandate the customers to pay back part of the credit card debt in the beginning. Most importantly the card should still be usable, with a lower APR, and a good rewards program, which are key for a good credit card offer.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Autumn 2018: Best Rewards Credit Cards for Thanksgiving Shopping

Autumn 2018: Best Rewards Credit Cards for Thanksgiving Shopping

Posted: November 8, 2018

Thanksgiving is coming, and whether you are hosting a meal or coming as a guest, your spendings are going to accumulate faster than you can notice. A holiday feast is a costly matter – each year Americans spend around $50 on a Thanksgiving ... Continue reading
The Best Credit Card for Earning Cash: Discover it® Cash Back

The Best Credit Card for Earning Cash: Discover it® Cash Back

Posted: November 2, 2018

You’ll have hundreds of dollars in your pocket in no time because you’ll earn money back on every purchase you make with this card. There are no restrictions on the amount of cash back you can get, and Discover even matches every penny you ... Continue reading
Top 5 Cards for Travel from Our Partners: Autumn 2018 – Expert’s Choice

Top 5 Cards for Travel from Our Partners: Autumn 2018 – Expert’s Choice

Posted: October 10, 2018

Nights are drawing out, the wind is colder every day and you already feel the lightest breath of winter on your face - autumn is here. Holidays are over, kids are back to school and all you are left with are hefty holiday bills that you ... Continue reading
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!