It happens to the best of us, we take a vacation, buy some Christmas gifts or maybe even just had an unplanned emergency and now you have a balance on your credit card. You are probably realizing just how much you spent and are looking for a low-cost way to pay off the balances over time, or maybe you are just tired of paying that high rate credit card. You get balance transfer offers in the mail and can find them online all the time, but how do you know which offers are the best? Here are a few steps to follow to help you analyze and decide.
The interest rate alone could make the difference. If you could lower a rate on a $5,000 balance by 10% that would mean a savings of about $500. Some departments store cards charge over 20% interest, while some credit card companies offer introductory balance transfer rates as low as 0% interest. You could save a lot by simply shopping around and reviewing some of those card offers you receive in the mail.
Many credit card companies now charge transfer fees when you do a balance transfer. The fee usually does not exceed 3% and sometimes there is a minimum and maximum amount they will charge. You need to pay attention to this because it is immediately added to the balance, making your total balance the amount you transferred plus the fee. Choosing an offer of 2.9% on a balance transfer with no fee may actually be more beneficial than a 1.9% offer with a 3% fee.
Term of the Rate
How long will you get the good rate for? 6 months? 12 months? The life of the card? This could be critical. if you choose a credit card just for the lowest rate and it expires in 6 months, you could be in for a shock as it adjusts to the normal variable rate. It could even make your payment increase significantly. It’s not uncommon for the balance transfer offer rate to go from the 0% introductory rate to as high as 12-15% after the first 6 months. This could really defeat the purpose of getting the card in the first place.
Get out of Debt.
Remember, when getting a new credit card you should have the goal to get out of debt as quickly as possible and following these three balance transfer tips will help you find a card that will best meet your needs.