Who should utilize a balance transfer credit card?
Balance transfer credit cards are designed for consumers looking to transfer a balance from a higher interest credit card to a new card which is designed specifically for balance transfers. The biggest advantage of a balance transfer credit card is savings on interest. Many of the balance transfer cards featured on LowCards offer a 0% balance transfer interest rate, with periods ranging from 12 months to as much as 21 months or more.
How much can I save with a balance transfer card?
A lot. For example, if you have a credit card with a 14.99% interest rate and owe $10,000 on it, and you make a $500 per month payment to that card without charging any additional charges on it, you would pay off that card after 24 months. However you would incur $1,578 in interest expenses during that time period. If you opened a 0% interest balance transfer card instead, you could save nearly all of that interest expense if the card has a long 0% balance transfer introductory period. In another example, if you owe $25,000 on a credit card at the same interest rate but pay $1,500 per month in payments, you would pay off that card in 19 months, but incur $3,208 in interest! A balance transfer card is a fantastic option for these scenarios and more to help save on interest.
What things should I watch out for when selecting a balance transfer credit card?
The biggest three things you want to keep an eye on are the duration of the balance transfer introductory period and the introductory balance transfer rate, whether there is a balance transfer fee, and what the on-going interest rate will be if you don’t pay off the balance during the introductory period. First and foremost, select a card with a 0% introductory offer on balance transfers and select a time period that works for you to help you pay off as much of your balance as possible during the intro period. Second, make sure you factor in the balance transfer fee, or select a card that has no fees on balance transfers during the introductory period. This will help maximize your cost savings with the new card. And third, make sure you check what the on-going interest rate will be on your balance transfer in the event you aren’t able to pay it off in full during the intro period. These three tips will help you maximize your cost savings and benefits of your new card!
Are balance transfer cards right for everyone?
No credit card is right for everyone. First and foremost, most balance transfer cards are designed for individuals with good or excellent credit, so if you have a lower credit profile, you likely will not be approved and should not apply for a balance transfer card. Secondly, balance transfer cards should be utilized by individuals who have a high interest balance on another card and want to consolidate their debt and pay it off, ideally during the introductory interest period to maximize savings. If you don’t carry a balance on other cards, you should probably not apply for a balance transfer credit card as there will be other card offers that will provide you with more benefits and features based on your credit card needs.