How Do I Transfer a Credit Card Balance?
Transferring a credit card balance to a different card with a lower rate makes sense if you're carrying a heavy debt load and are unable to negotiate your current interest rate. Before you begin the process, however, make sure you understand all that is involved with transferring your balance to avoid hefty fees or misunderstandings about the new terms.
It's imperative you read the terms and conditions closely to find out how balance transfers are processed. For example, some issuers may allow you to transfer a balance with no additional fees or minimum transfer amounts, while others will treat the transaction as a cash advance and attach a fee. Most cardholders who transfer a balance choose a card with a zero percent or low introductory rate. First, find out how long the introductory rate lasts. The teaser rates can vary from six months to more than a year, but it's important to know the exact amount of time you will have to pay down your balance in full before the default APR kicks in.
Secondly, know what the intro rate covers. With some cards, the intro rate may only apply to the balance transfer itself and not new purchases, while others may extend the teaser rate to both. This means that if you obtain a card in which the intro rate only applies to the balance being transferred over, you will have to pay the default rate for any new purchases you make with the credit card. You should also know the default rate will be after the intro rate expires. Make sure the new rate is not too high, especially if you think you will carry a balance on the new credit card. Knowing these terms will help you avoid racking up another large balance and creating a vicious cycle of debt.
When choosing a new card, it's also important to not only look at the balance transfer information, but also the same details that you would consider when choosing a new credit card. Review the disclosure agreement to determine whether annual fees, rewards programs or penalties are applicable. In addition, many card issuers have unique offers for balance transfer credit cards — attractive cards that are designed for receiving balance transfers.
Once you have chosen a new credit card and have initiated the balance transfer process, you should continue making payments on your current card. It can take between one and four weeks to transfer a balance, so don't neglect your current credit card in the meantime by failing to make the minimum payments. Doing so will result in late fees, a penalty rate and credit score damage. After the transfer has been completed, request notification from your lender that your balance is zero to confirm that the transfer was successful.
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