Frequently Asked Questions
What is a balance transfer?
A balance transfer is a simple transfer of one credit card’s balance to another credit card account. Think of it as a transfer of debt.
With a balance transfer, you can move the balance from a high interest credit card to a low interest credit card. This move will help you save money because you’re going to pay less in interest on your credit card debt.
Are there any downsides to a balance transfer?
Most credit cards will charge a balance transfer fee, which is usually equivalent to 3% of the balance that is transferred. You have to make sure that your interest savings also accounts for the cost of the balance transfer fee.
From time to time, you’ll see attractive balance transfer credit card offers that will waive the balance transfer fee if the balance transfer is made soon after you open the credit card account. Additionally, some credit card offers will include a low introductory APR on balance transfers for a certain period of time.
Should I use a balance transfer credit card to make purchases?
A balance transfer credit card is simply a credit card with a great introductory offer that involves balance transfers. You can use the card as you would with any credit card, but it isn’t always wise to do so.
Preferably, balance transfer credit cards are used for debt consolidation (moving debt balances to a single account for the purpose of reducing interest charges). If you transfer large balances to a credit card, you may be in danger of hitting the credit card’s limit. Also, since your focus is on eliminating debt, you shouldn’t be spending, as it will prevent you from reaching your goal.
* The credit score approval metrics are only guidelines and approval is not guaranteed. This information is based on data provided by Credit Karma