Make A Plan To Pay Down The Transferred Debt
Youre using a 0% APR card to cut interest costs and get rid of debt, so if you dont pay down your balance transfer before the introductory rate offer ends, the cost-saving value of the transfer may be lost.
Tips to keep you on track with balance transfer repayment:
Can You Pay Off One Credit Card With Another
Technically, you can use a credit card to pay off debt from another card — but not the way you think.
If youve ever gotten in over your head with and found yourself short on cash, youve likely wondered, Can I pay off one with another? Or, if youre really leaning into the idea of card hacking in order to maximize cashback or earn free travel, the idea has probably crossed your mind, too.
Dont be tempted: not only is it hard to do but paying off one credit card with another isnt a sound financial move.
Will Transferring A Balance Affect My Credit Score
That depends on a few factors. Applying for a new credit card will result in a hard inquiry on your credit report, which can lower your score temporarily. Adding a new card will affect your overall length of credit history, which could also temporarily lower your score. On the other side, a new card with a new line of credit can reduce your overall credit utilization, positively impacting your score.
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How Do Balance Transfer Credit Cards Work
Though balance transfer credit cards are technically credit cards, theyre more like a debt-financing tool. Theyre better used to pay off existing credit card debt than as a payment method.
A balance transfer is when you take the debt, or balance, you owe on one card account and transfer it to another credit card account. Usually this is done with the goal of saving money by transferring debt from a high-interest account to one with lower or no interest.
While many credit cards allow balance transfers, those primarily designed for the purpose all share one main feature: an introductory 0% APR period on balances transferred to that account, typically applicable to transfers made within the first 60 to 120 days of card ownership. The introductory APR period generally lasts between 12 months and 21 months, giving you a significant period of time to pay off your balance interest-free.
While a few credit cards offer no-fee transfers, most balance transfer cards charge a fee to transfer your debt, usually between 3% and 5%. Broadly speaking, the longer the introductory 0% APR period, the higher the fee, and vice versa. So the best cards without a balance transfer fee have a shorter introductory APR period, and those with the longest introductory APR period have a 3% to 5% transfer fee.
How To Transfer A Credit Card Balance In 3 Simple Steps
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What Do I Do If I Have Subpar Credit
Unfortunately, most of the cards recommended above require good to excellent credit scores, meaning above 670 or so. If your credit score is lower than that and youve been unsuccessful securing one of the cards above, there are alternative methods for refinancing your debt. You can call your current card issuer and try to negotiate a lower APR or explore a debt consolidation loan, which could allow you to gather all of your debt under a new, lower APR.
Take Note Of Your Current Credit Card Issuer
You generally cant transfer debt between cards from the same issuer, so you know which potential cards to immediately eliminate.
Here are some highly rated 0% APR balance transfer cards:
- Citi Double Cash Card .
- Citi Diamond Preferred Card .
- Citi Rewards Card .
- Citi Simplicity Card .
- S. Bank Visa Platinum Card .
- Citi Diamond Preferred Card .
- Wells Fargo Platinum Card .
- BankAmericard .
- HSBC Gold Mastercard .
- SunTrust Prime Rewards Credit Card .
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Understand The Interest Rate
Review the terms of the offer before you agree to a balance transfer. In addition to the fees associated with the transfer, introductory balance transfer rates often jump up dramatically after the promotional period has ended. Make sure you understand the added costs you could face if you don’t pay off the entire balance before the intro rate expires. Also, check the rate you’ll have to pay if you make a late payment.
Other Ways To Pay Off Credit Card Debt
If youre struggling with credit card debt, you have options other than paying off your credit card with another credit card.
- Debt consolidation: Plenty of banks allow you to secure personal loans. These can be used for a variety of different reasons, including home renovations, maintenance, and credit card debt consolidation. Doing so allows you to lump all your card payments into one single payment, and your loan may charge a lower interest rate than your credit cards.
- Snowball method: A popular method to pay down debt, the snowball method has you focusing on paying off your smallest debts first. Once all your minimum payments are made, you then put your excess funds toward paying off those small balances. This allows you to create a snowball effect, freeing up those funds to go toward your next smallest balance.
- Avalanche method: Another popular debt-payment strategy, the avalanche method focuses on you paying off your debt with the highest interest rate first. After making all your minimum payments, you then put any remaining funds toward your most expensive cards. This allows you to save more money, which you can use toward paying off further debt.
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Get Cash For Emergencies
You can write a check, drawing on your 0% interest card, deposit it in the bank and use that cash to pay the bills. Think of it like an interest-free loan. Once the emergency is over, you can pay back that money during the introductory period.
Its not quite as good as an actual emergency fund. Essentially, youre paying off bills with borrowed money and if you cant pay it back during the introductory period, youll be facing heavy interest.
If youre uncertain, youre probably better off with a personal loan, which can be paid back over three to five years.
What Is A Money Transfer
A money transfer is like a balance transfer, but instead of the money going from one credit card to another, the money from the credit card goes into your chosen current account.
This allows you to pay off an overdraft, or cover an essential or unexpected bill using a credit card, which might charge you a lower interest rate.
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Transfers To Existing Cards
Balance transfers can also be done with an existing card, especially if the issuer is running a special promotion. This can be tricky, however, if the existing card already has a balance that the transfer will only increase.
Suppose a cardholder owes $2,000 on a card with a 15% APR before they transfer a balance of $1,000 from a second card. The balance transfer rate offered is 0% for six months. The cardholder pays off $1,000 in six months, but because the 15% portion of the credit card debt is paid first, the 15% APR rate for six months applies to the $2,000 that was untouched by payments. Meanwhile, the card the $1,000 was transferred from has an APR rate of 12%, representing a loss of 3%.
Also consider what adding a big sum to a card will do to the that is, the percentage of available credit that’s been usedwhich is a key component of your credit score. Say you have a card with a $10,000 limit and a $1,250 balance. You are using 12.5% of your credit limit. If you then transfer $5,000, creating a total balance of $6,250, you’re now using 62.5% of your credit limit. This increase in a balance on one card could hurt your credit score and ultimately cause the interest rate to rise on this and other cards. This may, of course, be mitigated by the $5,000 lower balance on the higher-interest card from which the transfer was made.
Figure Out Your Repayment Budget
Next, decide how much money you can dedicate to paying off your credit card debt each month. To maximize your interest savings, youll want to make substantial progress toward paying down your consolidated balance during the introductory APR period. So you should plan to make well above the minimum payment while your introductory offer is in effect.
Some great budgeting apps are available to help you figure out a financial plan, but you can also do it the good old-fashioned way. Look at your monthly income and subtract how much you spend on necessities like rent, utilities and food, as well as other debt payments, like student loans or car payments. The portion of your income left over is the amount you have available to repay your credit card debt.
If that number isnt as high as you were hoping for, you might consider temporarily taking on some extra work to increase your income during the introductory APR period. For example, you could do some gig work in the evenings or start a side hustle on weekends and use the additional earnings to pay down your balance. Another option is to decrease your expenses. This may be easier said than done, but if you can find a way to cut your spending and sustain it over the introductory period, you can direct those savings toward debt repayment.
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Open A Card From A Different Issuer
Balance transfers can’t be completed between cards from the same issuer, so you’ll need to check that the cards with debt differ from the balance transfer card you plan to open.
Be careful with debt on co-branded cards, since those cards may not have the issuer present in the card’s name. You’ll need to verify the issuer by checking your cardholder agreement, calling customer service or searching online.
For instance, if you have debt on a Citi card you can’t transfer debt to another Citi card. And if you’re looking to transfer debt from both a Citi card and a Discover card, opt for a balance transfer card that isn’t from either of those issuers, such as cards from Amex, Wells Fargo, Chase and Bank of America.
What Is The Difference Between Joint
The difference can impact your balance transfer options and your legal rights when transferring or sharing debt.
|Joint-primary cardholder accounts||Primary cardholder accounts with secondary cardholders|
|Two people applied for a credit card under both cardholders names and have complete access to the account.||One person applied for a credit card in their name but wants to share the account with a partner but without joint account status.|
|Both have the ability to change credit limits, request account freezes or close the account.||Only the primary cardholder has control over credit limit changes, account freezes or account closure.|
|Both partners have regular sources of income and good credit histories.||Only the primary cardholder has to have a regular source of income and a good credit history.|
|Both parties remain liable for all transactions and payments made on the card.||Primary cardholder remains liable for all transactions and payments made on the card even if a balance has been transferred from an account held by the secondary cardholder.|
|If the closure of an account is the result of a divorce or a separation, both partners might have to pay half of the debt each, no matter who made which purchases.||In the event of a separation or a divorce, only the primary cardholder is liable for any balances on the entire account.|
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Calculate How Much Debt You Want To Transfer
When you’re looking to complete a balance transfer, you should take note of the amount of debt you want to transfer. Add up all the balances across your existing cards to calculate your total balance, which is important to know for the next step.
So if you have $3,000 on one card and $4,000 on another, your total balance would be $7,000.
Check Your Credit Before Applying For A New Credit Card
If you’re thinking about applying for a balance transfer credit card to get an introductory 0% APR, it’s important to note that these cards typically require good or excellent credit to get approved.
According to credit scoring company FICO, that typically means a credit score of 670 or above. Check your credit score to get an idea of where you stand, and if your credit history needs some work, take the time to improve your credit before you apply. Also, consider using Experian CreditMatch to get personalized card offers based on your credit profile.
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Do You Have A Good Credit Score
Qualifying for a top-rated balance transfer credit card is generally easier if you have a good or excellent FICO score . You might still be able to find a balance transfer credit card with a credit score below 670, but it will probably have a shorter intro APR period, which can make it more challenging to pay down your debt before the introductory offer ends.
You should check your credit score before you start shopping for a balance transfer card to get a better idea of which cards you might qualify for. If you have bad or fair credit, you may want to look into a personal loan. It wont have an introductory zero-interest offer, but it might be easier to qualify for with less-than-perfect credit and will likely have a lower interest rate than your credit card.
Will You Transfer Debt To An Existing Or New Credit Card
You have two balance transfer options: Open a new credit card with a limited-time 0% APR, or transfer a cards balance to an existing card with a lower interest rate.
Most issuers prevent balance transfers to a new card from the same issuer. Figure out any restrictions such as these before applying for a new card.
The first option will save you the most money on interest. For the second option, determine whether your existing lower-interest card can support the transfer without getting maxed out. If not, youll need to either request a credit limit increase or decide whether to apply for a new card.
Heres a simple example of potential balance transfer cost savings:
To transfer debt to a card you own, skip to Step 5 below.
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How To Transfer A Balance From Your Partners Account To Your Credit Card
Most credit card issuers only allow one primary cardholder, so transferring the balance from your partners debt to your credit card is the more likely option.
While qualifications and application processes vary between credit card providers, the following steps can be used as a general guide when transferring someone elses debt to a balance transfer credit card in your name.
Compare credit cards.
Compare 0% balance transfer cards to find one that has the best features for your needs.
Make sure it has a credit limit that supports your balance and you can pay the debt off before the promotional period is up. Also remember that some issuers only allow you to transfer up to a percentage of your credit limit or a flat maximum amount it sets.
Check the balance transfer terms and conditions.
Make sure the credit card allows balance transfers between different account names, and check if your partner will need to be a secondary cardholder. Check the cards disclosure statement or call the issuer for more information.
Apply for the credit card.
Provide details including your full name, Social Security number, address, drivers licence or passport number and employment details.
Include details of the balance transfer.
Youll need to provide details of the account, including your partners name and contact info, the account number, the financial institutions name and the amount of debt to be transferred.
If You Need As Much Time As Possible
If you cant make large monthly payments, youll likely want a card with a long introductory APR period. For example, the U.S. Bank Visa® Platinum Card could be an attractive choice because it offers a 0 percent introductory APR on balance transfers for the first 20 billing cycles, with an APR of 14.49 percent to 24.49 percent after the promotional period.
The Wells Fargo Reflect Card is another good choice, offering up to 21 months with 0 percent APR followed by 12.99 percent to 24.99 percent variable APR.
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