Credit Card Balance Transfers

Written by Kevin Tavolaro
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If your credit card balance starts to become too large for you to manage, you might be able be able to reassert some control with a carefully planned balance transfer. A balance transfer is a process by which you can use a second credit card to pay off the outstanding balance on the first card. The second card should have a very low APR, which can reduce your debt significantly. If done properly, a balance transfer can save you hundreds of dollars in interest.

Many credit card companies now offer a very low balance transfer APR in order to entice new customers. Before you decide which card to apply for to conduct your balance transfer, you should be sure that the new card can accommodate your projected payment schedule. An ideal card for a balance transfer would be one with a zero percent APR. However, such a low APR is usually only offered during an introductory period, after which the card starts to charge higher interest. Before you transfer your balance to a card with a zero percent APR, you should be sure that you'll be able to pay the remainder before the low introductory APR expires. Otherwise, you may compound your original debt by subjecting it to additional fees.

Conducting a Credit Card Balance Transfer

It's important to keep in mind that the majority of credit card users who transfer their balances to a new card rarely pay the balance off in full within the introductory rate period. Because of this you might want to take note of a card's standard interest fees, apart from the low introductory rate. A card might have a zero percent introductory rate, making it appear ideal for a balance transfer. However, after the introductory period, the rate may become higher than that of the original card. Many cardholders ignore this, believing that they will have their balances squared away long before the high APR goes into effect. During the planning stages, these customers tend to forget that that they will most likely be using the card for other expenses, in addition to their balance transfer. As more purchases are made with the card, it can become increasingly difficult to clear the original balance, which can then rapidly swell once the introductory period is over.

When you apply for a new card with the intention of using it for a balance transfer, only request to transfer one of your debts. Even though you may have several outstanding balances from a variety of cards, initially requesting a single transfer can greatly improve your chances of being approved for a card with a zero percent APR. It's usually easier to add additional balance transfers to a newly approved card than it is to be approved for a card if you're requesting several transfers. In some cases you might even consider applying for more than one card for a transfer, depending on the APR and duration of the low introductory rates.


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