Believe it or not, one of the most efficient manners to pay down the credit card debt is simply by making use of a balance transfer. While it might look as an unorthodox method to make this happen, the truth is that it works perfectly well to the point it can get you out of this uncomfortable problem.
If you don’t know anything about how to use balance transfer card to reduce debt, let’s say it all has to do with applying for a new credit card that has a very low annual percentage rate, and then shift every single balance you have on your credit card to this new one.
In case you want to know how this strategy reduce your debt and even save you a lot of money on interest payments, there are some steps you must follow.
The first one is essentially to apply for a balance transfer card with a much lower annual percentage rate than the one you currently have. On this point, experts recommend having a credit that features 0 percent during the first year. After all, this will make everything easier and the process would be made effectively.
Getting to this part, it is obvious that the card issuer will ask you about the details of the balances you want to transfer to the new credit card. Naturally, transparency is the key on this process, meaning that you must be crystal clear in order to get the card approved, considering that many banks tend to deny this if they notice anything they consider suspicious.
Once the bank approves your new credit card, the issuer will explain that you can now make the balance transfer. This process takes a little time, so you don’t have to worry. Of course, you need to take into consideration the fact that many credit card issuers will pay off the balances on the other cards once everything is approved. The sum of each of these balances will create the balance on the newly approved credit card.
On this point, it is possible that you’ll have the so-called “interest-free period.” This would be really good news since you can use this to finally pay down the whole balance on the newly-approved credit card. In the long term, this process will allow you to save a lot in interest payments.
However, you must consider the fact that the card issuer sometimes charge a balance transfer fee, which is essentially a tiny percentage of the total balance you are transferring from your old credit card to your new one.
Once the so-called “interest-free period” expires, the card issuer will charge interest on every single balance owing on the new credit card, being the reason why the best move you can take is to simply pay down the debt you have as soon as possible. After all, this is the element that will help you get the most of the interest savings’ amount.
The best balance transfer card
As you can imagine, a balance transfer card is not a monolithic or unchangeable object that comes in a predetermined manner. In fact, this transfer card can come with different features. This way, there are many things you should definitely look for in a balance transfer card so you can operate in the best way possible.
Getting to this point, it is obvious that the first thing you must look for in the balance transfer card is that it has an introductory annual percentage rate of 0 percent. After all, we’re talking about the most important feature considering that the so-called “interest-free period” represents the golden chance of paying down the debt without getting hit by a high annual percentage rate.
Another crucial feature you should look for is that the card has a zero percent balance transfer fee, or at least a very low one. The reason? Let’s say that almost every single credit card issuer will charge a 5 percent transfer fee on average, but some of these will actually waive this fee. In fact, you may notice that for the first months of the introductory period, the fee is zero percent.
Additionally, it is quite important that your new balance transfer card has a high enough transfer balance, considering that this detail will be the one that will allow you to make the whole operation efficiently in case your debt is not exactly small. This way, having the proper transfer balance will allow you to know your limit and prevent the uncomfortable situation of having to make the balance transfer on different opportunities.
In short, the greatest balance transfer card you can get is the one that has zero percent annual percentage rate for 18 months, 0 annual card fees and 0 percent balance transfer fees.
In order to make this happen, you just need to take into consideration the fact that if you show a really high credit score, the easier will be to qualify for this extraordinary card.
Of course, it is impossible to say this is the easiest thing in the world. However, it is a common process that you can get the best of it if you are disciplined.
If you don’t know which are best balance transfer cards right now, then you should look for the American Express Cash Magnet Card, which is the best for low interest. On the other hand, the greatest one for signup bonus is definitely the Wells Fargo Cash Wise Visa card, while the Citi Simplicity Card is simply the best for no late fees.