5 things to consider for credit card balance transfer

A credit card is one of the most essential tools which helps one financially in myriad ways. While it is an extremely reliable option for people, repayment of the used balance is something that follows up in a bit miserable way. However, there is one good way of solving the problem of repayment, namely balance transfer.

Balance transfer comes to the scene when one has a high-interest debt. Generally, the process involves transferring high-interest debt from one or more credit card to another with a lower rate of interest. This helps a person to remove the burden of high repayment with interest by introducing more months and a lesser amount of sum to be paid. But before opting for a balance transfer, you will need to research well to come across various liabilities that come along with it.

One must check the process of balance transfer in detail. Source: Loan

Here is a list of the five most important things that you may need to consider before a credit card apply-

1. Fee or charge is inevitable:

You must be aware of the credit cards that claim an introductory 0% interest rate since it has a specific cost that comes in the form of the balance transfer fees. Most of the credit card issuers charge around 2% to 5% of the transferrable balance. The percentage will be charged alongside a predetermined minimum amount. Also, the transfer fee comes separately and reflects the new account that you transfer the balance to.

2. Annual Percentage Rate (APR) intro period:

It is important to know how a 0% intro APR period actually works and what is the downside if one surpasses the allotted months. Usually, a longer promotional period is considered better since you would have more time to pay off your debt and other than that, the payment shall also be made in smaller installments. However, you will need to keep in mind that your payment would require to be paid before the 0% introduction period is over.

3. Understand the offer you get:

It is of utmost importance that you know your steps better than any other. While you may have a number of options with attractive offers on balance transfer, you must get yourself into sufficient research. You can select between the options that would appear as transfer a balance away from it or transfer a balance to it. Thus you have an outgoing as well as incoming balance transfers. Remember, there is a lower fee applied for incoming transfer alongside a lower interest rate and limited-time introductory APR.

4. Type of balance you can transfer:

There are many types of accounts that are eligible for a balance transfer. Other than the credit card, personal loans, auto loans, or student loans can also be eligible. However, be careful about the card issuer since it won’t allow you to take advantage of the transfer balance within the cards that they have issued. On the other hand, you can avail of this option for any sort of account which requires a monthly payment. But for the installment loans, it may not be a good idea since installment loans come with a lower interest than a credit card.

5. Always plan a backup:

Just in case you are over the provided intro period, it is advisable to keep a backup plan for your advantage. Because credit can open a way for more credit score debt. The 0% intro comes to the rescue by offering zero percent for months ranging from 12 to 24. If the introductory period is over, you may end up paying high-interest rates on for not one but two cards, which is even more hectic than paying a single high-interest debt.

Other than the above factors, it is important to know the timeline as to how long does your balance transfer takes to complete. Be informed that the time of completion of balance transfer depends on the issuer you are choosing. Most of the time, it happens in around two to three weeks. But within it, the time taken by a particular issuer can be as low as 2 days to as high as 21 days, typically depending on the situation.

Nowadays, you can also get the assistance of credit card apply online which made the process much easier. All you need to ensure is proper planning if you consider a balance transfer to cope with the high interest before a new credit card apply. Also, you will need to consider your eligibility before you can proceed with the idea of the balance transfer.

All of the things including the criterial requirement need to be taken care of before a credit card applies for the same. Since it is one of the most preferred ways of paying your debt with less interest burden, you will need to plan it well to avoid issues otherwise.

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