5 ways in which balance transfer allows you to repair bad credit


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 » Building Credit History » 5 ways in which balance transfer allows you to repair bad credit

5 ways in which balance transfer allows you to repair bad credit

Updated: December 26, 2012

The content is accurate at the time of publication and is subject to change.
Balance transfer cards represent a very good deal for those who have a bad credit and a large outstanding balance. If used properly, balance transfer credit cards can be used effectively to repair bad credit history and improving your credit rating. No Interest initially Once you transfer balance to the new card, you wouldn't be seeing massive interests adding up to your outstanding dues month after month. Therefore your outstanding due doesn't climb up for a fixed period of time. This will give you a very good idea about how much you need to pay at the end of the month, to clear the entire outstanding balance before the introductory period is over. You can plan and budget bill payments better and the stable amount will also provide enough motivation to get rid of it, instead of dealing with ever changing amounts due to astronomical interests. Additional credit line If the credit limit of the balance transfer card is equal to that of the older card, for example, then your credit limit effectively has been doubled for the same outstanding balance. This means your credit utilization has become twice as better, which augurs well for your credit rating. Credit rating goes up if the difference between the outstanding balance and the credit limit is high and vice-versa. Therefore the additional credit line will improve your overall credit history. Chance to reduce your APR If you are transferring your balance to another credit card, going for an offer with lower APR than your current credit card will help you improve your credit history. If you have missed your bill payments in the recent past, there is a good chance that your APR has been increased by the credit card issuer as a penalty. Therefore balance transfer card if chosen well can offer you respite from the high interest rate not only in the promotional period but also once the promotional or introductory period is over. Balance transfer will allow you massive savings Not only will a static outstanding amount help you plan better, it will also help you pay off the debt sooner. If your outstanding is 1000 dollars and the APR is 24 percent for your existing card, you are paying 20 dollars per month as interest. If your introductory 0 % APR offer is valid for one year, you save 240 dollars which gets effectively reduced from your outstanding due. Therefore the money paid as interest can instead be used to pay off your outstanding balance, thereby reducing the interest paid on it too, once the initial period is over. Monthly payments Balance transfer card offers you a motivation to pay off your debt within the introductory time period. If you can plan it wisely and keep paying the monthly dues, then your credit rating will improve as a result of your consistency. Consistent bill payments not only helps in getting rid of outstanding balance but also improves credit history, opening up better opportunities and credit cards for the future.

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!