Balance transfer in simple terms can be explained as the process wherein you transfer debt incurred on one credit or any other credit and that you own, in order to consolidate and make payments more effectively. Generally, the interest rate on the balance transfer credit cards will be low which will prove very beneficial in terms of making interest payments. Lower the rate of interest, lower will be the amount you owe and thus increase your capacity to meet higher amounts of the principal payments.
Here are a few things you should know about best balance transfer options:
- Even some of the best balance transfer options will not necessarily mean you have repaid your debt while making the said transfer. Since you are unable to meet payments and high-interest rates o your existing credit card, which will eventually affect your credit score, it makes more sense to distribute the debt.
- But in order to avail one of the best balance transfer credit cards, you need an excellent credit score and rating which will reflect your ability to repay on time. balance transfer mainly helps in interest amount saving which will free up the much-needed cash for making principal payments and meeting other obligations.
- Consolidating your payments to a low interest best balance transfer credit card will enable you to make all the necessary payments on time so that you can avoid unnecessary charges like late fees and more. instead of having debt spread across a number of high-interest credit cards, you should consolidate your debt in one place and meet deadlines and payments.
- Balance transfer cards will charge a percentage amount of your total debt for the services rendered, which in this case is transferring debt. The current fee for balance transfer across a number of banks and credit institutions is 3% approx. of your total debt that you want to transfer. So, if you want to transfer $20000 worth of debt to a low-interest card, the additional fees to be paid is $600. There are best balance transfer calculators available online which will help you determine whether a transfer deal is a feasible option or not.
- Reapplying for a new balance transfer when not needed might affect your overall credit score and credit rating. It is not necessary that once you apply and get to choose from the best balance transfer credit cards, you can repeat the process as and when the rates seem tempting. Keep in mind things like changing transfer fees, additional charge and unwanted debt consolidation if your finances are in order.