If you have several open credit cards with balances, you may feel overwhelmed. Between remembering the due dates each month and having to pay at least the minimum monthly payment on each card, it can become daunting. A balance transfer credit card comes in handy for a situation like this. A balance transfer credit card allows you to transfer all of your balances onto one credit card account, and usually, at a lower interest rate and a lower minimum monthly payment.
What Is a Balance Transfer Credit Card?
Getting a balance transfer credit card gives you the ability to transfer all outstanding balances from other credit cards to one new credit card account. If having all of your balances on one credit card sounds like it would benefit you, all you have to do is find a credit card account that allows balance transfers. You can either search online or go to your local bank to see if it offers one. Keep in mind that you will need a decent credit score to get approved. Not only do you need good credit, you should also have a decent financial history, such as no bankruptcy proceedings or negative remarks against you. Before accepting any terms and conditions, always make sure the credit card you're applying for gives you the limit amount you want. Not all credit cards offer the same amount.
What Is a 0 Percent Balance Transfer?
Getting your hands on a 0 percent balance transfer is usually the best option. When a credit card company says it has a 0 percent balance transfer, it means you won't be paying interest. Before jumping for joy, though, check the duration they give you at no interest. For example, some credit cards may have 0 percent interest for six months, while others offer it for 18 months. Make sure the duration matches what you need. Keep in mind, though, if you still have a balance after the allotted time, you will pay interest once the time runs out. Another thing to remember is that just because a card has a 0 percent balance transfer, it doesn't always mean it has 0 percent interest for purchases as well. Always check the fine print if you're looking for 0 percent interest on both balance transfers and purchases.
Do Balance Transfers Affect Your Credit Score?
As you begin your search for a balance transfer, your credit may be impacted. For example, when you apply for a credit card, the company does a hard inquiry into your credit report to check for negative remarks, and this can lower your credit score by a few points. Not only can your credit score decrease, but the hard inquiry will be on your report for approximately two years. Before you change your mind about a balance transfer, know that it can bring some positive effects to your credit, as well. For example, if you transfer all of your balances to the new credit card, your credit report will show that you have a higher credit limit. As long as you don't use your credit cards, you may notice your credit score increase.
Heather Burdo has been personally involved in business for six years. Her passion is to help small business owners and entrepreneurs through engaging and insightful content.