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If you are carrying debt on a high interest credit card, obtaining an additional credit card may be the way to resolve your problem, as long as you look for the card with the best credit card balance transfer options. Transferring the balance of your credit debt from a high interest card to one with low or no interest can save you money.
Balance Transfer Offers
Credit cards use balance transfer offers to entice new customers to apply for a credit card with their company. The transfer offer will either:
- Offer reduced interest rates on the transferred balance for a specified period of time, or
- Offer no interest charges on the transferred balance.
When you transfer the balance of your debt from one card to another, there are certain risks involved, such as:
- Your credit report may show that you are carrying more debt until the company reports the payoff;
- Even though the new credit card offers the balance transfer option, you may not be approved for enough credit to pay the other card's balance in full, leaving you with two payments;
- The terms of the balance transfer may have hidden costs associated with it.
To get the best credit card balance transfer offer, shop carefully. Read the fine print of any credit card agreement before agreeing to accept and activate the card and account. Make sure you understand the terms of the offer, when it will expire, and how long it will take.
Most balance transfers come with no interest or extremely low interest during the introductory period, which can last from a few months to a year. Be sure you know how long the reduced period is. In addition, compare several offers; 12 months at a low interest rate might save you more than 3 months at 0%.
Get the Most From Your Balance Transfer
To make the most of your balance transfer, try to pay as much as the balance as possible during the introductory period. During this period, more of your money is going toward the principal balance of the debt, allowing you to make better headway. Don't be tempted to reuse the paid-off card unless you have an emergency, because you may overextend yourself. Don't close the old card; having open, unused credit can actually help to improve your FICO credit score.
