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4 Easy Steps to Transferring a Credit Card BalanceOctober 2, 2020
How to Execute a Balance Transfer in 4 Simple Steps
For individuals carrying high balances on credit cards, one way to get rid of debt is to consider a balance transfer.
Balance transfer cards are those that offer a short interest-free period during which the cardholder can pay off their entire debt without accumulating any interest charges.
In this article, we’ll tell you how to execute a balance transfer in a few simple steps.
Step 1: Understand how a balance transfer works and its restrictions
A consumer can save money on interest charges, and at the same time pay off his accumulated debt through a balance transfer.
However, before one attempts this, you should understand a few things about the process.
- A balance transfer often involves a fee that ranges between 3% - 5% of the amount transferred. Hence, the transfer makes sense only if the savings on interest outweigh the fee you need to pay to transfer the amount in question.
- The 0% interest period on the balance transfer card lasts for a limited period of time known as the intro period. It may be as short as six months, or as long as twenty-one months. So, apply for the card only if you are sure that you’ll be able to pay off the entire balance during the intro period.
- It is important to know what APR you’ll be charged on the balance transfer card after the intro period is over. This is because if you are not able to pay off the entire balance during the intro period, you’ll have to pay interest on the remaining balance.
- It is advisable to not miss a single payment during the interest-free period. This is because many balance transfer cards cancel the deal and start charging interest right away.
- Certain credit card companies have restrictions in place when it comes to their balance transfer cards. For example, some card issuers do not allow consumers to transfer a balance from one card to another that’s been issued by the same company.
- Certain issuers also have restrictions on the amount that can be transferred. In other words, you may not be allowed to transfer your entire debt to the balance transfer card.
- Balance transfer options are usually available to only those consumers who have excellent credit. So, unless you are such a person, you may have to be content with transferring your existing balance to a card with a lower APR.
Step 2: Apply for the balance transfer card
To decide which balance transfer card to apply for, you must compare the length of the introductory period, the balance transfer fee, and the APR after the introductory period of various cards.
The best card would be the one that offers the longest introductory period, charges the minimum transfer fee, and has the lowest post-introductory period interest rate.
Finally, before you apply for the chosen card, figure out how much you’ll need to pay each month to eliminate the debt before the introductory period ends – this amount should be one that you can afford.
Step 3: Contact the new card company for the balance transfer
Once you’ve been approved for the card you applied for, you can call the card issuer for the balance transfer.
It is possible to execute the balance transfer over the phone or online – for this purpose, you’ll need to provide the new card company with details such as the account number of your old card as well as the amount of balance you want to transfer.
It often takes as long as 7 – 10 days for a balance transfer to go through, so continue to make payments on your old card until you receive confirmation from your new card company, or else you may have to pay a late fee to your old card company.
Step 4: Pay off your debt
You’ve already calculated the monthly payments you’ll need to make to pay off the balance before the end of the introductory period.
Make a budget for your expenses that will allow you to save enough for making these monthly payments.
Stick to this budget and, if you can, pay more than the calculated amount to eliminate your debt as soon as possible.
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