The average American household carries almost $7,000 in credit card debt month to month.
In short, credit card debt can be debilitating.
What Is a Balance Transfer Credit Card?
Balance transfer credit cards are normal credit cards with a balance transfer perk.
Qualifying balance transfers generally come with lower introductory interest rates for a set amount of time.
The rates then rise to a higher APR after the promotional period ends.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
These balance transfer fees vary based on the amount you transfer.
Typically, youll be charged a $5 to $10 balance transfer fee.
For higher balances, expect to pay 3% to 5% of the transfer balance.
Dont be scared off by the balance transfer fee.
Its minor compared with the amount youll save in most cases.
For example, a 10% balance transfer fee on a $5,000 balance adds $500.
Did you know?
Standard interest rates range from 14% to 26%.
Balance transfers with a longer introductory duration give you the best chance of paying off your total balance.
Generally, FICO credit scores of 690 or better are required for the 0% interest rate.
While its harder to get a credit card for balance transfers with bad credit, its not impossible.
Credit Limits
You cant transfer $3,000 onto a card with a $2,000 limit.
Verify the card youre considering has a credit limit that supports your transfer balance.
Just be sure toalwayspay this one by the due date.
Youll also be adversely affecting the age of credit by adding a brand-new account and potentially closing old accounts.
Heres what it’s crucial that you do:
1.
Find the Best Credit Card for Your Situation
Using the tools provided above, assess cards on the market.
Set Up the Transfer
Youll need to be proactive about this.
Youll either need to do this online or over the phone.
Have all the information youll need at your fingertips.
Pause unnecessary payments on other accounts.
You should also have a plan for your existing credit cards.
Now that their balance is $0, your credit utilization will have soared.
However, the credit card companies may close your accounts due to lack of activity.
Close any of those old cards that charge an annual fee.
Just remember to pay off those purchases immediately so you dont fall back into debt on those cards.
Timothy Moore covers banking and investing for The Penny Hoarder from his home base in Cincinnati.
Reporting from former Penny Hoarder staff writer Stephanie Bolling is included in this report.
(Can you sense my millennial sarcasm there?)
You know which ones were talking about: rent, utilities, cell phone bill, insurance, groceries…
