Are you up to your eyeballs in credit card debt? A balance transfer could be the lifeline you’re looking for. Next to payday loans, credit debt is the most expensive debt out there. With interest rates on most credit cards at 18.99 percent or higher, it can take years and cost thousands in interest charges if you’re carrying a mountain of personal debt. Before you throw in the towel, consider a credit card balance transfer. If you put a repayment plan in place, a balance transfer can save you a lot of money.
Why You Should Consider a Credit Card Balance Transfer
As its name alludes to, a balance transfer lets you transfer the balance on your existing credit card to a new one. With store credit cards charging as much as interest rates of 30 percent, your balance will never disappear if you’re only paying the interest charges. With competition heating up, credit card issuers are offering deals like never before. A balance transfer provides instant debt relief.
Balance transfers often come with a low introductory interest rate of only 1 or 2 percent (some even offer 0 percent interest). If you’re committed to repaying your credit card debt, a balance transfer can save you a boatload of interest. Not only will you save on interest, but you’ll also be free from your credit card debt a lot sooner.
Do you have so many credit cards you often lose count? A balance transfer makes managing your finances a lot simpler. When you transfer your balances from all your credit cards onto one, you’ll only have one credit card statement and set of rules to worry with. You’ll never have to worry about being dinged with interest and penalties by forgetting the deadline on one of your many credit cards again.
Length of the Introductory Rate and Fees
Before you agree to a balance transfer, you should find out how long the introductory rate lasts. The length of the introductory can be different with each credit card. Review the credit card agreement and ask questions before signing up. The introductory period typically starts at six months and goes for 12 months or longer.
The longer you get to the teaser rate for, the better, especially if you have a lot of debt to repay. Just remember the low rate usually only applies to balances transferred from other credit cards; you’ll most likely pay a higher rate if you make purchases on your new credit card.
Make sure you ask about fees for balance transfers. It may be hidden in the fine print that you’ll have to pay a fee of 2 percent of your transferred balance.
If you’re serious about repaying your credit card debt, a balance transfer makes sense, but if you’re simply playing a game of musical chairs with your debt, you should seriously consider if a credit card is right for you.