How Does It Work
A new lender will typically send a payment to your credit card company to pay off the old balance. Then what you owe will officially be transferred to the new card. This process can take a few weeks to be completed. While that process is going, its important to keep making minimum payments on your old card during this time to ensure that your payment history stays top-notch!
What To Be Aware Of When Transferring Money From A Credit Card
Whether you are paying off an old card balance or aiding someone in need, transferring money from a credit card to a bank account or debit card can help when you are in a bind. No matter your reason for transferring money, you may be wondering if its a good idea to transfer money from a credit card to a bank account or credit card. Put simply, transferring money from a credit card isnt always an advisable option. But when its the only option, there are ways you can protect your credit rating and save yourself from hefty fees. Here are three things to consider.
Know Your Interest Rates
In general, balance transfers have one interest rate, and other transactionslike purchases and cash advanceshave their own interest rates. This is important to know, because when you pay more than the minimum amount, issuers are required to apply that extra amount you paid to the debt with the highest interest rate . Always check the interest charge calculation section of your statements.
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Can You Transfer Multiple Balances
If you have outstanding balances on multiple credit cards, you may want to consider consolidating this debt by getting a single balance transfer card. However, the maximum amount you may transfer cannot exceed the available credit limit of your new card.
For example, if you get a balance transfer card with a credit limit of $10,000 and use it to make a $1,000 purchase, your available credit limit drops to $9,000. However, this is not the exact amount you may transfer from other cards because you also need to account for balance transfer fees.
Assume that your new card charges a 3% balance transfer fee. If you wish to transfer $5,000 from one card and $4,000 from another, you will need to pay balance transfer fees amounting to $270, which adds to your new cards starting balance. To complete these transfers for the entire amounts on both cards, you will need an available credit limit of at least $9,270 on your new card.
The Effect of Multiple Transfers on Your Credit Utilization Ratio
Carrying out multiple transfers to a single credit card may affect your credit score by increasing or decreasing your .
Keep in mind that credit utilization is also affected by individual card balances. Although your overall credit utilization may be low, if the utilization on one card is high, that may negatively impact your credit score. Pay down this card’s balance quickly to improve your credit.
Can A Balance Transfer Hurt My Credit Score
Shifting a balance from one card to another isn’t recorded on your credit file, so you’re free to balance transfer as many times as you like. However, a footprint is added to your file every time you apply for a new credit card.
Multiple applications, especially close together, and high outstanding debts, even at 0%, can affect your ability to get further credit. See our guide for full information. The most important preventative measures are to spread card applications out and use our eligibility calculator to check your chances of acceptance, before applying blind.
If you’ve a current 0% deal that’s ending and you’ve a need to transfer the balance again, the best time to apply is roughly six weeks before. Use our eligibility calculator to see which card you’ve the best chance of getting. This gives you enough time to apply, find out if you’ve got the card, and shift the debt, while your other card is still at 0%.
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What Is A Money Transfer Credit Card
A money transfer credit card enables you to move cash from your credit card to your bank account, either to clear a debt or sort out your overdraft. You usually pay a fee to move the money, but once it is in your account you may not have to pay an interest on the sum for 12 to 18 months. You will still have to pay it back eventually, though, so treat the money transfer as a loan and think carefully about how you will pay it off before you go ahead.
Compare The Best Balance Transfer Credit Cards
|0% APR for 21 months on balance transfers and purchases||5%|
|Runner up to Best Overall||$0||0% APR for 21 months on balance transfers and purchases||5%|
|Best for Long 0% Introductory APR Period||$0||0% APR for 20 billing cycles on balance transfers and purchases||3%|
|Best for Long Low-interest Introductory APR Period||$0||3 years at Prime Rate||No fee within 60 days, then 3%|
|0% APR for 15 billing cycles on balance transfers and purchases||3%|
|0% APR for 15 months on balance transfers and purchases||No fee within 60 days, then 5%|
|BankAmericard® for Students||0% APR for 18 months on balance transfers and purchases||3%|
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How Much Will I Have To Repay Each Month
You can choose how much to pay each month but should always make at least the minimum payment by the due date. Youll find this information on your monthly statement. You can also pay more than the minimum amount to reduce your balance sooner. This can help you save money by paying less interest at the end of your promotional period when your balance is charged at your standard rate.
If you dont make your minimum monthly payment by the agreed upon due date, or if you ever exceed your credit limit, youll lose your promotional rate and incur the standard purchase rate.
If you don’t pay off the whole balance each month on time, excluding any promotional balances, you will be charged interest on new purchases from the date the transaction appears on your account. Remember, your simple standard rate moves up and down in line with the Bank of England Base Rate.
Things To Watch Out For
Dont make purchases with a credit card you have made a balance transfer to, as youll only add to what you already owe.
- Interest rates most balance transfers offer a better interest rate for an introductory period. When that period ends, the interest rate will go up. So its important that you know when it finishes. Check how well the final rate compares with other cards, and see if you can get a better deal elsewhere.
- Check transfer limits check with your credit provider what limits might exist.
- Be aware that if you spend using your balance transfer credit card, the purchases you make might not be included in the 0% rate.
Find recommended balance transfer cards on the MoneySavingExpert website
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How Can This Negatively Impact My Credit Score
In most cases, as long as you execute a balance transfer strategy successfully and pay off everything you owe on schedule, your credit score should not be damaged. At worst, your wouldnt really change because the overall affect is neutral. At best your score may go up because youre eliminating the large volume of debt youre carrying around while building a positive payment history as long as you make all payments on time.
However, in certain circumstances a balance transfer consolidation strategy could hurt your credit score. Here are some scenarios:
Suntrust Prime Rewards Credit Card
Best for Long Low-interest Introductory APR Period
Zero percent balance transfer options work well for many customers, but some people need a longer period of time to pay off their debt. The SunTrust Prime Rewards Credit Card offers a low-interest introductory rate for 36 months with no fees on balance transfers made during the first 60 days.
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Whats The Benefit Of A Balance Transfer Credit Card
Balance transfer credit cards offer low or even 0% intro to borrowers who qualify. These APR periods often last between six and 21 months, which can give you plenty of time to pay down your balance interest-free. Depending on how much you owe, these interest savings can outpace the value of a new credit card sign-up bonus.
Some of these cards even offer rewards on your purchases. Explore your credit card options by visiting Credible to compare.
Keep in mind, though, that many balance transfer cards charge an upfront balance transfer fee. This fee typically ranges from 3% to 5% of the transfer amount and is added to your balance once the transfer completes. But in many cases, the interest savings make this fee worth it.
Best For Business: Us Bank Business Platinum Card
|This card does not offer a rewards program.|
|INTRO PURCHASE APR||0% for 20 Billing Cycles|
|INTRO BALANCE TRANSFER APR||0% for 20 Billing Cycles|
|Balance Transfer Fee||Either 3% of the amount of each transfer or $5 minimum, whichever is greater.|
|Cash Advance APR|
|Either $10 or 5% of the amount of each cash advance, whichever is greater.|
- Why We Chose This Card
- Pros & Cons
The U.S. Bank Business Platinum Card is our pick for the best balance transfer option for small businesses due to its exceptionally generous 20-month 0% APR period for transfers made in the first 30 days of account opening. Balance transfer offers are relatively uncommon for business credit cards and this card should be an excellent choice for business owners who need to pay down debt over time. There is a standard balance transfer fee of 3% but no annual membership fee.
Generous 0% APR offer, plus low ongoing APR
No annual fee
U.S. Bank’s small business credit card customer service is below par
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How To Use A Balance Transfer Card
Before you take advantage of a balance transfer offer, there are some things you should keep in mind:
- Transfers can’t be made between cards from the same bank. For example, if you have a Chase card, you can’t transfer debt to another Chase card.
- You may incur a fee. Most of these cards charge a balance transfer fee. It’s usually 3% to 5% of the amount you transfer. For example, transferring $5,000 to a card with a 3% fee will costs you $150.
- Most transfers need to be completed within 60 days from account opening. If you wait too long to make a transfer, you may miss out on the 0% APR period.
- There are limits on how much debt you can transfer. Card issuers typically limit the amount you can transfer to a percentage of your total credit limit or a specific dollar amount. And issuers also factor in the total cost of the balance transfer, which includes any balance transfer fees.
- Many balance transfer cards require good or excellent credit. If you have less than stellar credit, it can be difficult to qualify for a balance transfer card though we found one card that may accept fair credit.
Apply For The New Card
This is the easiest part. An online credit card application requires only a few clicks. Youll need your Social Security number, address, employment, income information, and perhaps credit-related history for identity verification. Not approved immediately? Dont sweat it. The issuing bank may just need more time. Wait for mailed information before applying for another card.
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How To Do A Credit Card Balance Transfer
How do credit card balance transfers work? After getting approval for a card with a 0% interest balance-transfer offer, find out whether the 0% rate is automatic or depends on a credit check. The next step is determining which balances to transfer cards with high interest rates should come first.
Next, calculate the transfer fee, which is typically 3% to 5% . Is there an amount cap on the fee? If not, that can make transferring larger balances worthwhile. Also check the on your new card before you initiate a transfer. The requested balance transfer cannot exceed the available credit line, and balance-transfer fees count toward that limit.
How Much Money Can Be Saved With A Balance
The potential savings from getting a balance-transfer card varies depending on multiple factors including the amount you transfer, the APR youre currently paying, the new promotional APR, the promotional period, and any transfer fee involved.
Still, the savings can be substantial, as the example below illustrates.
|Total cost, including $150 transfer fee||$5,150|
In this example, the cost of keeping the balance on the current card would be $5,527 and the cost with the balance transfer card would be $5,150, resulting in a savings of $377 over 12 months if you switched to the balance transfer card.
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How Do I Process A Td Credit Card Balance Transfer In Easyweb
It’s easy to process a TD Credit Card Balance Transfer in EasyWeb.
After you login:
You can also do a Balance Transfer on the TD app.
- It can take up to 7 days to complete a Balance Transfer request.
- If you make a mistake, you have until 11:59 p.m. ET to have your TD credit card Balance Transfer cancelled by calling TD Credit Cards and speaking to a Telephone Banking Specialist.
- If you have entered an amount for any balance transfer that is not a whole dollar figure but instead includes cents , your total balance transfer calculation for each such balance transfer will be rounded up to the nearest dollar and therefore your actual available credit may be inaccurate by as much as $0.99 per each such balance transfer requested. This inaccuracy will be corrected on your Account Activity page by the next business day after your balance transfer request has been processed.
Purchase & Balance Transfer Card
0% for 23 months from account opening on purchases, after which standard rates apply
0% for 23 months from account opening on balance transfers made within the first 3 months, after which standard rates apply
2.49% balance transfer fee applies
Purchase rate: 21.9% p.a Representative APR: 21.9% Assumed credit limit: £1200 Annual fee: £0
Your actual credit limit and APR may vary depending on our credit assessment of you. Interest on fees and charges is payable in line with our terms and conditions.
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Limit Spending On Your New Card
If you use your new credit card to buy things straight away, a different interest rate may apply. This interest rate or ‘purchase rate’ is usually much higher than the balance transfer rate.
Also, your repayments may go towards paying off the new purchases, instead of paying off the balance you transferred. This means you dont get the full benefit of the transfer, and you add to your credit card debt.
If you limit your spending, you can focus on paying off the balance faster.
Pay Off Your Balance Before The 0% Apr Period Ends
While balance transfers can be useful tools for controlling credit card debt, personal finance experts warn that consumers often misuse them.
The biggest mistake consumers make with balance transfers is not paying off the debt they transferred before the 0% introductory APR offer expires. Then, when their new credit card adjusts to its higher interest rate, their existing debt once again starts to grow quickly.
Others also make the mistake of adding new debt to the credit card they paid off with their balance transfer. Then, when the introductory offer expires, theyre left with a portion of their old debt and new debt, all at high interest rates. These cardholders are now in an even worse financial situation than they were in before they started their balance transfer.
Now you are paying higher interest on the balance you transferred, and you are faced with new debt, said Sabree. You have to change your frame of mind when you do a balance transfer. You can no longer live beyond your means.
Fortunately, avoiding this mistake isnt complicated. Zeidman said the best move consumers can make before starting a balance transfer is to create a household budget showing their monthly expenses and income. Once theyve done this, they can determine exactly how much they can devote each month to paying down their .
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