How Can a Balance Transfer for Credit Cards Work?
The goal of a balance transfer credit card is to put a balance from an old credit card on a new one. To put it differently, it pays off the old issuing card company. The credit card holder completes a credit card application, like he or she did when opening the initial credit card. Normally, card buyers transfer credit cards based on the”perks.”
These perks include an introductory rate of interest. The rate varies, but it can go as low as zero percent. The introductory rate may last a few months to a year depending upon the issuing credit card company. If the cardholder does not accumulate more debt with interest rates during the introductory period, they may be able to hold onto their introductory rate. After the period is over, the rate is billed each month the individual carries a balance on the credit card.
Opening a balance transfer credit card has many benefits for the cardholder. He or she removes a credit card with potentially large rates of interest and finance charges. Additionally, the individual may focus on reducing debt by large payments on the new credit card without needing to worry about significant interest fees.
Take Care to Read the Fine Print
But, there are some significant disadvantages. Balance transfer credit cards demand a good credit history for an approval. Most card approval require a fee to start a new credit card. The fee-free balance depends upon the individual’s credit score. The fee might be a flat rate or a percentage of the balance transferred. As an example, it might be 3%, $50, or more.
Transferring one balance to another credit card does not close the present credit card. The cardholder will still have to go through the process of closing that account. Additionally, the introductory interest rate only applies to balance transfers and regular purchases. If there are any transactions that don’t fit into these categories, the introductory rate does not apply.
There’s a good deal of fine print associated with balance transfer credit cards. Therefore a cardholder interested in pursuing this credit card should be extremely mindful of the related terms. This will save you from getting into financial trouble later.
How to Acquire a Balance Transfer
For anybody interested in applying for a balance transfer credit card, there are a number of things to do. Supply the new credit card company with all the credit card balances that will be transferred into the new card. The cardholder is also required to inform the company how much he or she is transferring. As an example, for those who have a credit card balance of $5,000, you might just wish to transfer half of the amount onto the new card.
The next step is calling all of the credit card companies or creditors which will have the balances transferred to another credit card. This method takes about fourteen days for the cash to be transferred onto the new credit card. Thus, in case you have a payment due during this time, it will be paid. This will avoid any late fees.