What is Balance Transfer and How Can It Help Me?
Are you looking for a way to pay down your credit card debt, but don’t know how to go about doing so? A balance transfer could help you pay down your debt and save you some cash in the process. Read on to find out how a balance transfer works and how it could help you.
What Is a Balance Transfer?
A balance transfer is when you transfer high-rate balances from existing credit cards to another credit card. In order to transfer the balances, you’ll need to open a new credit card, which usually has a lower interest rate than your current credit cards. By transferring your balances to a new card that has a lower rate, you’ll be able to save a significant amount of money by paying down your debt at a lower rate.
Balance transfer credit cards usually offer some type of low-rate introductory period that ranges from six months to 24 months. After the introductory period, the rate will adjust to the standard rate that you’re approved for.
How Does a Balance Transfer Work?
The first step in securing a balance transfer is to apply for the credit card you wish to transfer your balances to. During the application process, you’ll also have to provide information about the balances you want to transfer. This means you’ll need to provide the credit card issuer name, the account information and the amount of debt on each card.
Once you’re approved, your new card issuer will pay off your old credit card balances. The old balances will then show up on your new credit card account. When your balances have been transferred, you’ll be able to pay them all down with one monthly payment.
How Can a Balance Transfer Help Me?
Balance transfers are great if you’re looking to pay off your debt more quickly. By consolidating all your debts onto one card, you can make one monthly payment at a low rate, instead of making several payments at higher rates.
They also help you save on interest. Since the rate of your new card is lower than the rates of your transferred cards, you’ll pay less in interest. Depending on how high the rates of the other cards were, this could mean you’re looking at some serious savings. To determine if a balance transfer is a good option for you, use a debt consolidation calculator.
Balance transfers are a great tool to use when looking to consolidate debt. By switching to a lower rate and combining all your payments into one monthly payment, you can save a considerable amount of money and pay off your debt more quickly.