What is a 0% Balance Transfer Credit Card?
Are you making your payments on time, but just not getting ahead on your balances because of the interests on them? You likely weren?t aware of the wonderful fact that you can move the balance of one or more credit cards to another credit card with a balance transfer -? you just simply cannot pay off one credit card with another, that?s all. To entice you, there are some credit card issuers that offer special promotional interest rates on balance transfer for a set period of time.?
The best of all the balance transfer promotions is the 0% APR balance transfer because it means that until after the promotional period you won?t pay any interest on the transferred amount. This is a great opportunity for you to consolidate your debts and transfer their balances to a 0% balance transfer credit card! If you have a good to excellent credit score you may qualify for a promotional balance transfer. Do not fear that you may not qualify until you check and see by trying it to find out. Start New Financial helps you with this and the successful consolidation of your debts. Our expertise and experience with this is second to none. However, if you have a low credit score due to maxed out balances, a 0% APR balance transfer would not be a good option for a debt consolidation.
A 0% balance transfer credit card is one that, for the entire promotional period, has a 0% interest rate that allows you to move the balance to it from one or multiple cards where you might be paying interest, thereby helping you pay off any outstanding debt while saving you money. You enjoy this promotional period for at least 6 months, and there are many credit card companies that allow you to enjoy this promotional grace period for up to 21 months. This is why a 0% balance transfer credit card is so popular for debt relief because many people use it for debt consolidation since it is so ideal for such.
As long as you abide by the terms of the agreement, you won?t pay any finance charge on the balance transfer during the entire promotional period. To put this into perspective, you won?t pay interest on your balance transfer for 12 months if your balance transfer has a 0% interest rate for 12 months.
Every one of your monthly payments go toward reducing the balance (and the balance transfer fee if you were charged one) since there is no finance charge. However, the regular balance transfer interest rate will go into effect on the unpaid portion of the balance transfer once the 0% balance transfer promotional period ends. When this occurs, you will continue to be charged interest each month until the balance is completely paid off. This is why, when you?re able to pay off your entire balance before the promotional period ends, you get the maximum benefit from a 0% balance transfer. You can potentially save more than a thousand $1000 dollars by completely avoiding interest on your balance, which is why you get the maximum benefit from a 0% balance transfer by paying it all off before interests kick in.
There are some hard-to-find credit card balance transfers with 0 interest that also don?t charge you a balance transfer fee, but it can be worth paying a fee for them if in the long run it saves you money. After all, that is always the objective. But you will still save money during the promotional period of a low-interest rate balance transfer card, such as a 2.99% one, if you cannot qualify for a 0% APR one.
These cards typically come at a cost, but they can help you save on interest payments while you pay down debt. 3%-5% of the transferred balance is usually the balance transfer fee that is charged by most credit card companies. To put this into perspective, it can cost you anywhere between $15 and $25 for every $500 in debt that you transfer.
At this time, with the economy so hurt by the pandemic, every cent counts. Therefore, a balance transfer credit card that features no such balance transfer fee, as well as having a long 0% interest period with a $0 annual fee, would be the ideal one. In fact, it would be the PERFECT one in an imperfect world! The unfortunate reality is that these ?triple-zero? cards are so hard to find! The terrible economic environment caused by COVID-19 is what has made these cards even more harder to find than ever before.?
But regardless of the pandemic and the balance transfer fee, an excellent credit rating of typically 720 or higher FICO scores have always been required to qualify at all for many of these products and services. It is still possible to pay down debt for less by using a balance transfer credit card. The majority of credit card companies don’t allow same-issuer transfers. In order words, if your debt is with American Express, for example, you can’t move it to another American Express card. Wouldn?t it be so convenient if you could? Wow, glorious!
If you?re being charged a balance transfer fee on a balance that you had already intended to pay down in three months or less, you could actually? exceed in fees what you?d save on interest in that such short period of time. So you may be better off sticking with the card you already have, when that?s the case. This is why it?s best to have excellent professionals like Start New Financial handling all your debts and finances, for we would get you everything that?s the most beneficial to you upon our thoroughly analyzing your complete situation and financial standing.
A balance transfer becomes more beneficial the higher your current interest rate is and the longer you need to get out of debt.
As already mentioned, there has always been only a small number of 0 balance credit cards that offer no transfer fee, but now the pandemic has shrunk it to even smaller. There are some credit unions and regional banks that offer balance transfer cards at a lower cost, but these products come with their own limitations: Regional banks don?t operate in every state and credit unions require membership. Simply check with your local banks in your area to see what they have to offer you.
?What are the Advantages and Disadvantages of a 0% Balance Transfer?
You can enjoy the great opportunity of at least 6 months with no credit card interest with a 0% balance transfer because, by law, unless you’re late on a payment, a promotional interest rate must last at least six months. Yeah baby!
Before you jump at the opportunity, however, you should still consider the advantages and disadvantages of doing a balance transfer since, as with so many things in life, it may not be as cut and dry as you might think. For this reason, Start New Financial has put together the following overview of the advantages and disadvantages of balance transfers. We break down each of them for you into more detail below. It is great that you can take advantage of a credit card with a lower rate of interest that has better terms than what you?re currently paying so you can consolidate and move the balance of all your credit card debt into it. Debt consolidation always simplifies and organizes your life more, which brings you more peace by keeping a lot of stress at bay. What you need to be careful about is the fact that you can risk creating more debt where your credit score could be impacted, as you may not save money after the balance transfer fee is added, not to mention that after the promotion you could end up with a higher interest rate as well. You avoid all risks of falling into any such inconveniences by calling Start New Financial TODAY and trusting everything to our caring hands.
Advantages of a Balance Transfer
A few of the advantages of taking a balance transfer offer are
You enjoy a lower interest rate on your new credit card or even no interest at all. If you presently have a high-interest rate on your existing credit card balance, then the lower rate is especially beneficial and welcomed. More of your monthly payment will go toward reducing your credit card balance, instead of it all going towards interest, since you’ll have a lower interest rate and possibly no finance charges. You can ideally do a debt consolidation by transferring the balances of your high-interest debts to the new 0% balance transfer! By the time the promotional period ends, you may even be able to pay off your balance completely, since you?ll be working with a high monthly payment with a long promotional period.
It allows you to move your balance to a credit card with better terms. You can close out your old credit card account for good since you?ll be moving your balance to a better credit card that rids you of the bad terms your current credit card may have – such as a short grace period and high fees. You may even be offered credit card rewards on your new purchases with your new credit card!
Once you’re sure your credit score won?t be hurt, you can close your old account after the balance is completely transferred.
?You comfortably and more conveniently leave yourself with fewer credit card payments to make each month because you consolidate your credit card debt. The hassle of making multiple credit card payments to several different credit cards is eliminated when you move those multiple balances to a single credit card that has a high enough credit limit to withstand the transfer. It is more cumbersome and difficult to remember to pay off several credit card balances than it is to pay one single one. This is great debt relief!
Disadvantages of a Balance Transfer
Even with a balance transfer offer, we must always also consider the potential downside of transferring a balance to a new credit card.
Your existing debt, income, or credit score might disqualify you for a promotional interest rate, which could lead to you ending up with a higher interest rate. To get a low-interest rate balance transfer offer, a consumer typically must have an excellent credit score. If not, the consumer will just qualify for the regular, higher balance transfer rate of interest.
Accounting for the annual fee, if the new credit card has one, and the balance transfer fee, balance transfers can get quite expensive if you don?t know or aren?t aware of what you are doing. You must ensure to compare the interest you would pay if you left your balance on your old credit card and also factor in the full cost of moving your balance to a new card before you transfer the balance. That?s because there are situations where, in the long run, it may cost less to leave your balance on the old, original credit card.
As mentioned earlier, the typical balance transfer fee is from 3 to 5% of the balance you’re transferring or $5, whichever is greater.
Your credit score could be hurt by a balance transfer. Your credit score can be negatively affected by your applying for and opening a new credit card account. Additionally, anytime you have a credit card with a balance that?s above 30% of the credit limit, your credit score takes a hit. If the credit card that you move your credit card balance to doesn?t have sufficient credit available, then your credit score could drop.
If your credit card payments are timely each month, you not only reduce your balance, you wonderfully can even recover lost points.
You could run the risk of more debt. There suddenly is more credit available to you when you transfer your balance to a new credit card. To overcome the temptation and not make purchases on your old credit card takes a lot of discipline, or else you will just end up with more debt than you began with. If it takes closing out your old credit card in order to remove any temptation of racking up more credit card debt, then do so.
You must think about the long-term effect that transferring your balance to a new credit card will have on your finances since there can be some drawbacks. Transferring your balance is the ideal thing to do that is well worth it if it will ultimately help you save money and pay off your credit card balance faster. After all, that is the main objective, right? Give Start New Financial a call for your free consultation and savings estimate and we promise to provide you all the help you need and more, to help you become free from your debts as soon as possible while saving you the most money too. We offer the best debt relief with our debt consolidation and debt settlement programs.
With Start New Financial, your money goes directly towards principal instead of interest
The very best debt help services can be found only at your gold standard Start New Financial. We are your world-class debt relief company that provides a supportive financial lifeline most consumers desperately need in these pandemic times.
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