Balance Transfer Credit Card - Credit Card Balance Transfer

If you have a huge loan or a heavy debt on a credit card, which you can't afford to pay off, do not think that you have met the end of the line. Even if you have no other means of backup in such a situation, the balance transfer facility could be an option for you.

As with loans, balance transfer is a viable alternative for credit cards as well. The service is offered by many card-issuing companies and banks, and you can avail it with relative ease.

What Is Balance Transfer?

BT is a facility in which you get a new credit card with a low APR, and then transfer your high credit balance to it from your old cards. Basically, you use a new card to pay off your debt on other cards, but you get the provision of paying a lower interest rate. You might even find a few balance transfer cards which offer 0% introductory APR for a limited period.

Why Opt for a Balance Transfer?

A few of the benefits of balance transfer credit cards are given below:

• Pay Less Interest: The very reason to even consider a balance transfer in the first place is that you get to pay a lower rate of interest than that at your previous credit card company. This can be either for your general financial benefit or to repay debt more easily.
  
  
• Streamline Your Finances: You can transfer your outstanding balance from multiple credit cards to a balance transfer card, thus streamlining all your payments into a single payment, which is much easier to manage. It is also unlikely that you will miss payments due to different billing cycles.

However, when would it be ideal to consider a balance transfer? How can you get a balance transfer done? What factors are to be considered before going for a balance transfer? Let's get a little deeper into it.

How Do Balance Transfer Credit Cards Work?

We, at mymoneykarma, strive to make your finances easier for you to understand. Mentioned below is a detailed step-by-step description of how the balance transfer facility works.

1. Search for the best and most suitable balance transfer facility. (Heads up! The next section deals with this in detail)
2. Apply for a balance transfer card - you could do so online, through your phone, or by visiting the card issuing company directly.
3. Provide the details required - such as the account number and the amount to be transferred.
4. Wait for the issuer to approve your request. The lender or card issuer will check your credit history and credit score before making a decision. There isn't any guarantee that your application will be approved; even if it does, the full amount might not be approved for transfer.
5. Understand the terms and conditions. A card issuer might not allow you to transfer debt between the products of their own company. However, you can move other types of debt (like a loan or a mortgage) to a balance transfer credit card.
6. Wait for three weeks and keep making payments on your old accounts till you get alerted by the new card issuer that the transfer procedure has been completed.
7. Once the balance transfer is successful, all your old cards will be wiped clean, and your entire debt will be transferred to your new card.
8. Try to pay off most of your balance within the introductory period when the APR is low. That's how you must utilize a balance transfer card to your advantage - save money on interest and pay off debt faster.
9. What about the old cards? Well, try not to close them, as doing so will make your credit score drop. Keeping your old accounts active is healthy for your credit history. However, if there is a hefty annual fee that you can't afford, you better cancel it rather than inviting more debt.