It can help you save on interest, while boosting your credit score, if you pay on time and in full before the end of the balance transfer period. However, carefully weigh the pros and cons, because a balance transfer is not right for everyone. You may decide it is worth considering other options if you have poor credit or mounting debt. One big advantage of balance transfer cards is the potential to greatly reduce the amount of interest you pay on your debt. By lowering interest, you have the opportunity to put more money toward the principal amount you owe and potentially pay off your debt faster than you would be able otherwise. The biggest drawback, however, is the possibility of mismanaging your credit cards and racking up more debt instead of paying it off.
- This can be a great option, but if you’re not careful or aware of the potential drawbacks, you could wind up with even more debt.
- Our goal is to give you the best advice to help you make smart personal finance decisions.
- Before you jump at the opportunity, consider the pros and cons of doing a balance transfer.
A major highlight for the card is that it charges no late fees and has no penalty APR. This means that cardholders can pay at any point throughout the month without incurring in additional charges. Payments must still be made within the billing period, of course, to avoid reports to the credit bureaus.
Summary Of Money’s Best Balance Transfer Credit Cards Of May 2023
Credit card companies make offers to new and valued customers all the time. For example, they may offer low-percentage introductory or teaser interest rates, enticing new consumers to apply for cards or existing customers with good histories to transfer balances. This is because a balance transfer will help you decrease your credit utilization rate over time.
You could move your credit score in the right direction if you proactively use a balance transfer to pay down debt. [newline]Capital One cardholders who transfer a balance can pay the Interest Saver Payment by the due date each month, and avoid paying interest on future purchase transactions. The Interest Saver Payment amount can be found on the statement and it includes the minimum payment plus all your non-promotional balances (including purchases, cash advances, fees and finance charges). A balance transfer can be an effective way to pay down an existing balance at a lower, more manageable rate. Some cards may even offer a reduced rate on balance transfers for a limited period of time—this can ultimately save you money if you pay them down before the promotional rate expires. If you can afford the monthly payments to pay your debt off before interest kicks in, then a balance transfer card could be right for you. While keeping your credit cards open could help you avoid hurting your credit score (depending on your circumstances), the transfers also free up the cards’ credit limits.
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What Kinds Of Debt Can Be Transferred To A Balance Transfer Credit Card?
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Learn why your credit score may not change when you pay bills on time & pay off credit card balances. By keeping your existing cards and not opening any new ones, you won’t post any so-called hard inquiries on your credit report.
The offers that appear on this site are from companies that compensate us. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. Bankrate has partnerships with issuers including, but not limited to, American Express, Bank of America, Capital One, Chase, Citi and Discover. Amy Fontinelle has more than 15 years of experience covering personal finance, corporate finance and investing.
Pros And Cons Of Balance Transfers
If you simply need the longest period possible to pay down your balance, the Wells Fargo Reflect® Card is a good fit. It offers an interest-free period on balance transfers for 21 months which gives you lots of time to pay off debt. Like many of our top choices, the BankAmericard® credit card is ideal for debt-laden cardholders who are purely focused on paying down their credit card balances. Among its cost-saving benefits, it also features a lower-than-average ongoing APR, in case you can’t pay off your balance during the interest-free period. Even when you account for a 3% or 5% fee, completing a balance transfer can save you more money than continuing to chip away at high-interest credit card debt.
If you have a lot of debt and in turn have a high credit utilization, you may not qualify for many balance transfer cards. Typically, the best 0% balance transfer offers go to those with credit scores near or above 700.