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Compare cards by calculating how much youll pay monthly to clear the transferred balance before the promotional APR period ends:
Take the total amount of debt youll transfer to the card and add the balance transfer fee to it. This is the total balance transfer cost.
Example: $5,000 debt + $150 fee = $5,150 balance transfer total cost
Next, divide the total balance transfer cost by the 0% balance transfer APR offer length in months. That gives you the minimum amount youll need to pay each month to eliminate the transferred debt interest-free.
Example: $5,150 / 12 months = $429.16 minimum monthly payment
If the minimum monthly payment is too high for your budget, find another card with a longer introductory APR offer to spread out and reduce the monthly payment.
If you dont pay down the balance on time, youll pay the standard balance transfer interest rate on the remaining balance.;
How To Transfer Credit Card Balances To A New Card
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Recently been approved for a new credit card with a 0% interest balance transfer offer?;This introductory rate often only lasts for a short, predetermined;period.;After that, the interest rate on balances will certainly go;up.
So how to transfer a balance from one credit card to another? Here are 10 steps on how to transfer a credit card balance from an old card to a new one with a lower rate.
Things To Remember Before Applying For A Credit Card Balance Transfer
In your haste to get rid of hefty interest fees it can be easy to rush into applying for a balance transfer but before you do, ensure you understand the following:
How long you have to transfer the balance
Some companies specify a balance transfer period, so if you have not set up automatic transfer ensure you do it within the specified timeframe.
If you get rejected it may negatively impact your credit score;
It is best to complete an online eligibility calculator to improve your chances of acceptance when applying for a credit card. If you do not get accepted this may negatively impact your credit score and therefore you may not get accepted when it comes to applying again.
Don’t forget the credit card balance transfer fee
The card balance transfer fee is normally 3% of the balance being transferred. Some providers offer better rates but remember the advertised rate is not always the one you end up with.
Don’t spend on a balance transfer credit card
Some balance transfer credit cards do not allow you to spend on them, and with the ones that do it is not advisable to use the facility as they will often charge a hefty interest rate. If you are looking to transfer a balance to a credit card and use it for purchases there are some credit card companies that offer a dual credit card with a 0% interest rate for both balance transfers and spending. The spending rate is generally for a shorter term.
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How Much Interest Will I Pay
To offer you greater flexibility and savings, we regularly offer interest-free or promotional balance transfer rates, for varying periods of time. There may be a one-off handling fee to pay when you make a balance transfer, which is usually a percentage of the amount youre transferring. Youll find details about specific promotional offers available to you in;your Barclaycard app and;;Barclaycard online servicing.
You can continue to buy things with your Barclaycard, but if youve got a balance or money transfer, youll be charged interest at your simple standard rate for anything new you buy, unless you pay those purchases off in full by your payment due date or you have a purchase offer.;
Review The Balance Transfer Limits
Once you open a balance transfer card, you’ll need to consider the amount of debt you’re actually allowed to transfer. While you want to transfer the total balance you calculated in step two, you may not be able to.
Card issuers often limit the total balance you can transfer to a percentage of your or specific dollar amount. For instance, terms for the;Citi Simplicity® Card state that the total amount of your balance transfer request can’t exceed your available credit limit.
For example, if you open the Citi Simplicity Card and receive a $10,000 credit limit, you should be able to transfer up to $10,000, including the balance transfer fees.
It’s also important to know that balance transfer limits also consider any new purchases charged to your card as well as any balance transfer fees. So, if you have a $10,000 credit limit and charge $3,000 in new purchases, you’ll only be able to transfer up to $7,000.
In addition, some balance transfer cards incur a 3% fee or higher, which will also be applied to your total limit. The;Citi Simplicity Card charges a balance transfer fee of either;$5;or;3%;of the amount of each transfer, whichever is greater.
Keep in mind that balance transfer requests vary among card issuers and cardholders. The balance transfer limit you receive can vary based upon your credit history at the time you submit the request.
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How Long Does A Balance Transfer Take
It typically takes anywhere from two to seven days for your transfer request to be completed, but it depends on the issuer of the card youre seeking to transfer a balance to.
For example, American Express says it typically takes from five to seven days for a transfer from another bank to be completed but it could take as long as six weeks. Citibank says on its site it can take from two to 21 days and Chase says most transfers are complete within two weeks.
The exact time for your transfer will likely depend on both the bank youre transferring the debt to and the bank youre transferring the debt from.
Should I Transfer My Credit Card Balance
This is a common question that people ask. Even knowing how balance transfers work, you may be wondering if its the right solution for you. You want to know that it will work and that youll be able to become debt-free.
You also want to avoid the risk of making a challenging situation with debt worse, which can happen if you run up new balances on your other cards or start making regular purchases on the balance transfer card. All of this can mean you wind up with more debt instead of less.
Here is just one example of a balance transfer question that Debt.com has received:
Question: I have around $5,000 on, I think, five or six credit cards. Ive been seeing these offers for other credit cards that say I can transfer my balance to them; and they wont charge me interest. I dont see how this isnt a scam. How can they make money if I move thousands of dollars to them and then pay it all off without a dime in interest?
Are these things legit? If they are, whats the catch? Theres got to be a catch.
Richard in Delaware
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How To Choose A Balance Transfer Credit Card
When looking for the right balance transfer card for your circumstances, ideally youll search for a balance transfer card with low or no balance transfer fees to minimize the cost when you do a transfer. Keep in mind youll also need to choose a card from an issuing bank other than the one youre looking to transfer debt from since banks wont let you transfer debt from one of their cards to another. Finally, consider the length of your balance transfer. The longer it is, the more time youll have to pay off your debt before interest piles up, but the cards with the longest 0% APR offers may also have higher balance transfer fees.
Other considerations include:
What Is Balance Transfer Apr
A balance transfer APR is the amount of interest youll be charged on your debt when you move it to a new card. Some cards offer 0% interest for an introductory period of time, other cards may offer a low ongoing interest rate. The main goal in doing a balance transfer is to save money on interest, so ideally the APR of the card youre transferring a balance to will be less than the interest rate on your current card.
What Is Balance Transfer In Credit Card And How Balance Transfers Work
Transferring outstanding debt from one credit card to another, usually, a new one is a balance transfer. Consumers often use credit card balance transfers who want to transfer what they owe to a credit card with a much lower promotional interest rate and better benefits, such as a rewards program to earn cash or points for spending newspapers.
How Does A Credit Card Balance Transfer Work
When youâre applying for a balance transfer credit card, here are some general steps you might take:
- Check your current interest rate. Youâll have a better idea how a balance transfer credit card might help you if you know where youâre starting from. For example, youâll be able to look for one with a lower or even 0% introductory APR.
- Consider a card that lets you transfer a balance. Some lenders let you apply online or over the phone. Youâll be asked for information, including name, address, Social Security number and income.
- Initiate the balance transfer. Your application could be approved immediately, or it might take several days to hear back. If youâre approved, youâll provide the details of the account you want to transfer from and how much of the debt you want to transfer.
- Wait for the transfer to go through. For Capital One cardholders, it might take three to 14 days, depending on whether the transfer is made electronically or through the mail.
- Start paying down the balance. If you have 0% introductory APR, you wonât have to worry about the interest for a set period of time. So, if you have nothing else on the card, you can put 100% of your payments toward your original debt. And that could help you get out of debt faster.
And no matter how you use your card, be sure to pay on time every month. Getting behind on payments could result in late fees and hurt your credit.
Review Your Credit Card Debt
First, evaluate approaches for your credit card debt situation. Will you transfer the balance of only one card, or will you consolidate debt from multiple high-interest cards onto one card? Do you have a target date in mind for being debt-free? Review your current annual percentage rate , and decide how much youre going to transfer to another card.;This information will make choosing the best balance transfer card easier.;
A balance transfer is best when you can move debt from a high-interest card to a lower-interest card. However, keep your low.
Ensure that your existing credit card accounts and credit history are in good standing before taking action. Most balance transfer cards require a good to excellent credit score. For FICO scores, good is 670 and up.
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.
Impact Of Missing Credit Card Payments
There are heavy repercussions if you are not able to pay the credit card debt. In an increasing interest rate scenario, debt rises and with every missed payment or minimum balance could affect the overall credit history of the credit card holder. Once the takes a beating, it is very difficult to rebuild, especially in times of rising debt and the individual falls into the vicious cycle of debt.
For example, when a customer has a credit statement with dues of Rs. 10000, now for this say the minimum amount due is Rs. 1000. Lets say due to a cash crush the customer pays Rs. 1000 out of which majority say Rs. 700 will go towards the payment of interest for the balance to be paid with Rs. 300 goes towards the principle.
Thus, at the end of the next billing cycle balance of Rs. 9700 apart from interest to be paid and GST provided you had not used your card the previous month. If the customer uses a credit card to purchase items worth say Rs. 3000 then the balance will be Rs. 12700. This will just keep increasing each month.
As it is seen rising credit card will make life difficult for the borrower and a credit card balance transfer would be the way to ease this burden of debt.
How Do You Complete A Balance Transfer
The process isnt complex, but it helps to know the steps ahead of time:
How To Transfer A Credit Card Balance
Once youve chosen the card you want to transfer a balance to, you can apply online or via phone call with the bank. During the application process, youll have the option to transfer your balance to the new card. If the card youre transferring a balance to has a balance transfer fee, that will be automatically added to the total balance youll owe on the new card.
Keep in mind you generally cant transfer a balance from one card to another card issued by the same bank, and some banks will have limits, regardless of your credit score, of how much youre allowed to transfer to a new card.
What If The Credit Limit I Get Isn’t High Enough
Your balance transfer limit will usually be 90-95% of your total credit limit, so you wouldn’t be able to transfer more than that amount.
If you can’t shift all your debt over, move what you can and check your chances of acceptance for another provider’s card. If there’s a good chance, apply and move the rest there.;
Otherwise, just pay the minimum repayment on the new card with the 0% period and concentrate all of your cash on clearing the rest of the debt you couldn’t shift over. Once that’s paid, you can move your payments back to clear the balance at 0%.;;
What Types Of Balances Can I Transfer
You wont be able to transfer a balance between cards from the same card issuer. So you cant transfer a balance from one Chase card to another, for example, or one Bank of America card to another. Credit card issuers dont want you to take advantage of them by just transferring a balance back and forth between their cards.
Other than that, most credit card companies will allow you to transfer a balance from practically any account that requires a monthly payment.
You can even conduct a bank balance transfer, where you request a balance transfer with a credit card, but instead of paying off another cards balance, the funds go to your bank account. Then, the amount of money that went to your bank account has to be paid off as usual. This could be helpful if you need cash in a pinch.
But when it comes to installment loans, its not necessarily a good idea to transfer the balance to a credit card just because you can.
Installment loans dont hurt your credit much compared to revolving credit card debt. Even if you have a very large installment loan, its better than owing the debt on a credit card. Installment loans often feature lower interest rates than credit cards anyway. So, if you have an affordable interest rate, it may be best to leave your installment account parked with the same bank and pay it off as quickly as you can.
Transferring Debt Isnt The Same As Repaying
It may feel great to move your debt from a high-interest card to a card with a long 0% introductory APR or a lower ongoing APR, but thats just the first step. Since your balance has been transferred, not cleared, youll still have to work hard if you want to pay it off in a timely fashion.
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The only real, solid, definable benefit from a balance transfer is you can save money over the long haul if you pay back the previous amount you owed and you pay it at a lower interest rate, including all your costs, says Mike Sullivan, director of education for Take Charge America, a Phoenix-based nonprofit consumer credit counseling company.
In other words, your debt doesnt simply disappear when you do a balance transfer. In many ways, your work is only beginning.