Credit cards with no balance transfer feature are very enticing. They are used by millions of Americans and are used everyday. But there is a problem. A lot of those cards have very high interest rates.
Credit cards that are not specifically designated as low-rate balance transfers, will charge you anywhere from 2% to 5% on your balance transfers. That’s a significant chunk of money, especially if you have a large amount of outstanding debt. So, seek out other credit card offers to waive balance transfers fees. You will have to search for special offers outside of your current bank.
One way of transferring credit card debt faster is to contact your credit card issuers and ask them if they offer any sort of introductory rate or reward program. A lot of card issuers do offer this type of deal. If you are committed to paying off your debt within the next 12 months, this could be a good option.
For many people, their interest savings will be minimal, if it at all. The interest free period can last anywhere from three months to three years. At the end of that introductory period, your payments will return to their normal interest rate. If you were able to pay off your credit card debt at a lower interest rate, then the benefits of transferring your balances are diminished. On the flip side, if you were able to bring down your interest rate, the benefits of transferring your balances are enhanced.
Some financial experts recommend that you transfer all of your balances to one credit card. However, this will take time and effort. You would need to open a new credit account and make a deposit of at least ten percent of your current balance. Ideally, the funds would come from one of your savings accounts. In addition, you would have to ensure that you cancel your old balances and take out the one credit card that offers the lowest interest rate.
For some people, the idea of transferring debt onto a new card may not sound appealing. They will question the practicality of having to pay one interest rate instead of several. Despite these concerns, there are actually many advantages to transferring credit cards onto one new card. One of the primary reasons why people resort to transferring balances is to eliminate high-interest credit cards. This would allow you to get rid of the debt immediately. Even if your interest charges remain, at least you will no longer be paying through the nose for those high-interest cards.
Another benefit of transferring credit card balances to a lower interest rate card is that it can reduce your overall debt burden. Typically, the balance transfers only result in lower payments. However, there are times when a balance transfer is actually a way to save money. When you transfer all your high-interest balances to a low-interest card, you will no longer be paying outrageous interest rates. Instead, you will be able to pay at a more manageable amount each month. Therefore, this method is considered a win-win situation by many.
Lastly, you will be able to manage your debt better with the assistance of a lower minimum payment. If you were to keep all of your credit cards charged to the highest interest rate possible, you would spend most of your working life paying off these debts. However, by transferring your credit cards to a lower-interest card, you will be in a much better position to manage your monthly obligations. Ultimately, you can enjoy the benefits of lower payments and a better credit score.