Balance Transfer Basics
What is a balance transfer?
A balance transfer is an offer that allows you to transfer the debt from one account (usually, a credit card) to another. Normally, you would perform a balance transfer to a card that has better terms.
Some key components of the terms include: the APR (rate), period and fees. Typically a low introductory balance transfer rate is offered. At the end of the intro period, any outstanding balances will be subject the regular "go-to" balance transfer rate. A one-time fee, usually a percentage of the amount transferred, will also normally be assessed at the time of the transfer.
How long does it take to process a balance transfer?
When you request a balance transfer, the bank that issued your credit card makes a payment to your other creditors. It may take several weeks for them to receive the funds and credit your other account. This means you should make payments to your creditors until the balance transfer is complete to avoid late fees and finance charges. It's best to contact your other creditors to confirm they have received the balance transfer.
The balance transfer may post to your new account within that several week time-frame. You should check with your bank by either calling or logging into your account online.
What's so good about balance transfers?
It's possible to save a lot of money with a good balance transfer offer. Even with credit tightening, there are many 0% interest balance transfer deals available to those with good credit. And even with less than perfect credit, there are opportunities to lower your interest rate. As always, read the terms and conditions of the credit card application to avoid any potential traps.
Tips
Resources
- 0% Balance Transfer Credit Cards
- Balance Transfer Credit Cards
- Best Balance Transfer Deals
- Consumer Action
- Federal Reserve
