Explain this balance transfer offer
A balance transfer is when you move money you owe from one credit card to another that charges less in interest. Used wisely, a balance transfer could help you take control of your debt. That’s because these credit cards usually come with a 0% interest offer for a limited time.
What is balance transfer offer?
A balance transfer credit card is any credit card that lets you transfer balances from other accounts. Most of the time, balance transfer credit cards offer consumers an introductory 0 percent APR—or zero interest—on their balance for a limited time (usually between 12 and 21 months).
Why would someone want a balance transfer offer?
But in general, a balance transfer is the most valuable choice if you need months to pay off high-interest debt and have good enough credit to qualify for a card with a 0% introductory APR on balance transfers. Such a card could save you plenty on interest, giving you an edge when paying off your balances.
What is balance transfer in simple words?
A balance transfer is the act of moving the amount of money that you owe from one credit card to another credit card that has a lower interest rate.
What is a balance transfer explain how it works and why you might use it?
A balance transfer is a transaction that enables you to move existing debt to a new credit card. The purpose of a balance transfer is to get a lower interest rate and pay off what you owe much faster. Just keep in mind that most credit cards charge a 3% balance transfer fee.
Is it worth it to transfer a balance?
Is a balance transfer fee worth it? If you have a significant amount of credit card debt, the 3% balance transfer fee (or sometimes even a 5% fee) is absolutely worth paying when transferring your balance to a card that has a 0% intro APR offer, but only if you still need time to pay off a balance.
What is a balance transfer fee?
A balance transfer fee is a charge imposed by a lender to transfer existing debt over from another institution. Balance transfers are commonly offered by credit card companies. Fees generally range between 2% and 3% of the amount transferred or a fixed dollar amount (as high as $10), whichever is greater.
Should I take advantage of a balance transfer offer?
Take advantage of a lower interest rate.
If you are currently carrying a high balance on a credit card with a high interest rate, this can be one of the biggest advantages of credit card balance transfer. It’s a great way to pay down your debt faster by lowering the total amount you are paying in interest.
Is there a downside to balance transfers?
Cons of a Balance Transfer
You could end up with a higher interest rate if you don’t qualify for a promotional interest rate because your credit score, income, or existing debt. You typically must have an excellent credit score to get a low interest rate balance transfer offer.
Do balance transfers hurt credit score?
The simple act of performing a balance transfer isn’t going to affect your credit score much, if at all. The key to changing your credit score is to use the transfer to reduce your debt — both in dollar terms and as a percentage of your available credit.
What happens if you don’t pay off balance transfer?
In rare instances, cardholder agreements stipulate that if you don’t pay off your transfer balance before the end of the introductory period, you’ll be charged interest on the entire transfer balance, just as if the transfer had been a regular purchase.
How does balance transfer work UK?
A balance transfer credit card lets you move debt from one (or several) credit cards or store cards to another. Many balance transfer credit cards charge a low rate of interest or even no interest at all for a set time, making them a good option for those who are paying high interest rates on existing card debt.
What is a balance transfer fee UK?
A balance transfer fee is a one-off charge that’s a percentage of the amount of debt that you transfer – the typical fee is around 3%, with a minimum charge of about £3. If you transferred a debt of £1,200, then 3% of this would mean you would pay a £36 fee.
What does 0% balance transfer mean?
With a 0% balance transfer you get a new card to pay off debt on old credit and store cards, so you owe it instead, but at 0% interest. A card will have a 0% period, during which you pay no interest – for example, 28 months – and sometimes you’ll pay a small fee.
Why would a balance transfer fail?
Your credit limit is too low.
The issuer will hold your balance transfer request until they are able to confirm the amount to transfer in relation to your credit limit. If your credit limit is lower than the amount of money you requested to transfer from another card, the issuer will likely reject the request.
Does a balance transfer close the old card?
A Balance Transfer Does Not Cancel Your Old Credit Card
When your balance transfer is complete, your old card isn’t automatically closed, and you’re not required to cancel it either. Depending on the new card’s credit limit, you may not be able to transfer the entire balance.
What credit score is needed for balance transfer cards?
670 or higher
Issuers of balance transfer cards typically require a good or excellent credit score to qualify, which is 670 or higher on the 850-point FICO credit scoring scale.
Can you request a balance transfer offer?
Call the issuer and ask to speak with a customer service agent over the phone. Explain that you’re hoping to pay a lower balance transfer fee. Depending on the situation, they might be able to negotiate the balance transfer fee on an existing offer.
How many times can you do a balance transfer?
If you have credit card debt on multiple cards, it can be a good idea to consolidate it to one balance transfer card to save money on interest charges and manage your debt better. You can generally transfer as many balances as you want to a single 0% APR card, but you’ll need to meet certain requirements.
How can you avoid a balance fee?
The only way to avoid a balance transfer fee is to find a card that doesn’t charge one. Such offers are generally reserved for people with good to excellent credit. If you’re not sure you fit that description, check your credit score to find out.
How do I get around a balance transfer fee?
The simplest way to avoid balance transfer fees is to apply for a credit card that does not charge one. Getting a credit card with no balance transfer fee that also offers a low balance transfer APR is actually the best overall way to reduce the cost of existing debt and pay off what you owe sooner.
Can you ask your credit card company for a balance transfer?
With some credit cards, you can request balance transfers while filling out the application before you’re even approved. Phone. You can call your issuer to request a balance transfer. As with online balance transfers, come prepared with information about the debt you’re looking to move.