A balance transfer is the process of moving existing debt from one credit card to another credit card. Here’s why: Suppose a financial crunch lasts for months. How a Balance Transfer Works. What Is a Balance Transfer and How Does It Work. This card offers new applicants 14 months of 0% APR financing on both new purchases and balance transfers, with a 3% fee for transfers completed within two months of account opening. The Citi Double Cash card also offers up to 2% cash back on all purchases, with no limits. For example, say that you have a 2000 dollars debt on a card with 12% APR. It’s pretty simple. New applicants can receive 18 months of 0% APR promotional financing on both new purchases and balance transfers, with a 3% balance transfer fee. So, what is a balance transfer? On top of that, the card doesn't charge an annual fee. New applicants can receive 18 months of 0% APR promotional financing on both new purchases and balance transfers, with a 3% balance transfer fee. A balance transfer allows you to move your existing credit card debt to a new credit card with a lower or 0% rate of interest. Also, most credit card issuers will impose a balance transfer fee of 3% or 5% of the amount transferred, especially on promotional financing offers with 0% APR. There’s no annual fee for this card, no penalty interest rate and your first late payment fee is automatically waived. Ads by Money. Not only will you avoid paying a lot of money in interest charges, all of your monthly payments will go towards the principal, allowing you to pay off your balance sooner. What Is a Balance Transfer? Plus, you’ll receive a cashback match of all the rewards you’ve earned in your account’s first year. How to choose the best balance transfer card. Also, keep in mind that any payment you make above your minimum payment will first be applied to the balance with the highest interest rate, which won’t be a 0% APR balance transfer. This fee is added to the new balance and incurs interest at the same rate as the rest of the balance transferred. Here Are 8 Smart Money Moves You Can Make Now, Bad Dogs: These Breeds Are the Worst for Your Home Insurance Policy. A balance transfer is a transaction where existing credit card debt is moved to another account with a different card issuer. The amounts owed makes up 30% of your FICO score and is the second most important factor after your payment record. How do balance transfers work? That’s because multiple new requests for credit can be seen as a sign of possible financial distress. Opinions expressed in this article are the author's alone, not those of a third-party entity, and have not been reviewed, approved, or otherwise endorsed. A balance transfer is when you move money you owe from one credit card to another that charges less in interest. Finally, you can look at cardholder benefits such as travel insurance and shopping protection, which can be valuable. Unlike the Double Cash, it’s not a rewards card, but it does have no annual fee. So even if your balance isn’t incurring interest, paying it down or paying it off altogether will help to raise your credit score. If your credit card issuer offers balance transfers (and most do), then you can contact them and ask to perform a balance transfer. But if taking advantage of a 0% APR balance transfer offer allows you to postpone repayment of your debt, this can have a negative effect on your credit compared to paying off your debt. Completing a balance transfer is pretty simple; it only takes a few steps to complete. This can be a good way to keep track of your balance and payments with everything in one place. This is easy to do when you open a new account that offers 0% APR promotional financing on balance transfers. For those paying down high-interest debt, such a … It can also make sense to transfer a balance to a card without a 0% APR promotional financing offer, so long as it has a significantly lower interest rate, and there’s no balance transfer fee. When using credit cards, one of the concerns you should always have is how your actions will affect your credit history and your credit score. Credit repair companies, like Credit Saint, specialize in finding and helping you remove mistakes on your report to help you improve your credit. It could save you money and help you simplify your payments — but watch out for fees and other potential drawbacks. When you make on-time payments, this will add positive information to your credit history and can help your credit score. You can't pay off one credit card with another credit card, but you can move a balance to another credit card with a balance transfer. Many credit card issuers offer new applicants the chance to transfer a balance and pay 0% APR, or a reduced APR, on the transferred amount for a limited time. Now, let’s look at what is balance transfer from the point of selecting the best balance transfer card. This could be 0% APR or a lower, promotional interest rate. What Is a Balance Transfer? A balance transfer is the process of transferring high-interest debt from one or more credit cards to another card with a lower interest rate. The card issuer will need to know the name of the of the issuer of the card you want to transfer the balance from, its account number and the amount you wish to transfer. Lots 81-82 Street C A balance transfer is when you pay off the balances on existing credit cards or loans by transferring them to another credit card account. For instance, if you have a card with a 25% APR, and you can transfer your balance to a card with an 18% APR, you will save a tremendous amount on interest charges, allowing you to pay off your balances sooner. What Is a Balance Transfer? For example, does it have an annual fee, can you earn rewards and does it offer any kind of bonus for new applicants. Then you have to wait for the transfer to go through and the credit processed to the account you’re transferring the balance from. This will help you pay off debt faster, since more of your payments will go toward the principal balance each month instead of toward interest charges. Since the amount of the fee is added on to your new balance, a lower fee is much better than a higher one. When you apply for any new credit card, including a balance transfer card, you are making an inquiry into your credit. You earn 5% cash back on up to $1,500 spent each quarter at select merchants and merchant categories that change each quarter. Just note that you cannot transfer a balance between two accounts held by the same card issuer. The other major factor is the card’s balance transfer fee. https://money.com/what-is-a-balance-transfer/. A balance transfer is just what it sounds like: You transfer the balance from an old credit card to a new one with better terms and a lower interest rate. The official balance transfer definition is moving debt from one credit card to another. A credit repair company could improve your chances of getting approved. However, there are many cards that offer balance transfers at the standard interest rate that don’t have a balance transfer fee. However, there are many cards that offer balance transfers at the standard interest rate that don’t have a balance transfer fee. It is most commonly used when describing a credit card balance transfer. This is one of the top balance transfer cards that also happens to be one of the best cash back reward cards as well. But if the cardholder was willing and able to pay off that balance within a few months, than the balance transfer fee could be greater than the amount of interest saved. The other major factor is the card’s balance transfer fee. © Provided by Money.com A balance transfer is a type of credit card transaction in which debt is moved from one account to another. In the mean time, you’ll still incur interest charges on the account you’re transferring the balance from, and you’ll still need to make any payments that are due on the account. Basically, it’s a credit card transaction. We may be compensated if you click this ad. These fees are imposed by nearly all card issuers offering 0% APR promotional transfers, and are usually either 3% or 5% of the amount transferred. But once again, note that your payments will first go towards any purchases you made on that account that incur a balance, before being applied to your 0% APR balance transfer. Apart from a low interest rate, certain balance transfer … That helps you This article originally appeared on Money.com and may contain affiliate links for which Money receives compensation. © Copyright 2020 Ad Practitioners, LLC. Plus, there’s no annual fee for this card. When you apply for any new credit card, including a balance transfer card, you are making an inquiry into your credit. A balance transfer is the transfer of the balance in an account to another account, often held at another institution. What Is a Balance Transfer and How Does It Work? Show full articles without "Continue Reading" button for {0} hours. Effectively, a card issuer pays off the balance from another issuer’s account, which then becomes a debt with the issuer’s own account. The best balance transfer credit card with rewards is the Discover it Balance Transfer card, because it offers 0% APR for at least 15 months on balance transfers paired with a 3% balance transfer fee, and it offers above-average cash back rewards that won't lose value. This is designed to help you manage paying your debt down in a more affordable way. Understanding balance transfer Balance transfers offer credit cardholders the opportunity to move a balance of debt from one card to another — Often to a card with a lower interest rate. Finally, you can look at cardholder benefits such as travel insurance and shopping protection, which can be valuable. This usually means you can repay your debt faster and save significantly on interest costs. this link is to an external site that may or may not meet accessibility guidelines. The primary goal of a balance transfer is to save money on interest charges. Balance transfers aren’t always the best way to get debt relief, however. But if taking advantage of a 0% APR balance transfer offer allows you to postpone repayment of your debt, this can have a negative effect on your credit compared to paying off your debt. Microsoft may earn an Affiliate Commission if you purchase something through recommended links in this article. Bad credit can weigh you down. A balance transfer moves debt from one account to another, for example from a high-interest credit card or loan to a new credit card with a low or 0% introductory annual percentage rate (APR). You should carefully consider the benefits and downsides to balance transfers before initiating the process. A credit card balance transfer is the transfer of the outstanding debt (the balance) in a credit card account to an account held at another credit card company. Learn more about how we make money. It can also make sense to transfer a balance to a card without a 0% APR promotional financing offer, so long as it has a significantly lower interest rate, and there’s no balance transfer fee. Opinions expressed on this site are the author's alone, not those of a third-party entity, and have not been reviewed, approved, or otherwise endorsed. How a credit card balance transfer works. Balance transfer definition: the act of transferring debt from one credit card to another, assuming that the second... | Meaning, pronunciation, translations and examples In the simplest of terms, a balance transfer allows credit card holders to roll over their debt from one card to another, usually at better terms. If the card has a 0% APR rate, the you won’t incur interest charges on your amount transferred until the promotional rate expires. In the mean time, you’ll still incur interest charges on the account you’re transferring the balance from, and you’ll still need to make any payments that are due on the account. In addition to the amount transferred to the new account, the transferring card issuer will often add a balance transfer fee. For more information, read. This type of transfer is great for people who have a high-interest debt to pay down, as it brings money-saving benefits. What is a balance transfer? One of the tools they use to do that is a balance transfer. This could be 0% APR or a lower, promotional interest rate. One of the tools they use to do that is a balance transfer. Moving outstanding debt on one credit card to another card—usually a new one—is a balance transfer. This transfer has the potential to save the cardholder hundreds of dollars in interest charges over that time, even when you consider a 3% or even a 5% balance transfer fee. For example, does it have an annual fee, can you earn rewards and does it offer any kind of bonus for new applicants. That’s because multiple new requests for credit can be seen as a sign of possible financial distress. Unlike the Double Cash, it’s not a rewards card, but it does have no annual fee. You earn 5% cash back on up to $1,500 spent each quarter at select merchants and merchant categories that change each quarter. Guaynabo PR 00968. Credit Repair companies can help you repair and improve your credit so you can apply for the credit card of your choice. The amounts owed makes up 30% of your FICO score and is the second most important factor after your payment record. A balance is a move to a lower interest rate from one or more credit cards. This transfer has the potential to save the cardholder hundreds of dollars in interest charges over that time, even when you consider a 3% or even a 5% balance transfer fee. All Rights Reserved. The card issuer will need to know the name of the of the issuer of the card you want to transfer the balance from, its account number and the amount you wish to transfer. For more information, read Money’s full disclaimer. There are many credit cards that offer 0% APR introductory financing for balance transfers. Among these offers, the two most important terms to consider are the length of the promotional financing period, and the balance transfer fee. There are many balance transfer offers on the market and the length of the promotional period can vary from 6 to 36 months. You earn 1% cash back at the time of purchase, and another 1% cash back when you pay for your purchases, for a total of up to 2% cash back. Assuming the balance is transferred to a lower account, this will reduce the amount of interest. Once you are approved for the new account, you will have an additional loan on your credit history. Like the Citi Double Cash, the Citi Diamond Preferred card also offers new applicants can receive 18 months of 0% APR promotional financing on both new purchases and balance transfers, with a 3% balance transfer fee. Plus, you’ll receive a cashback match of all the rewards you’ve earned in your account’s first year. A balance transfer intro APR is a period of time — often between 12 and 21 months — where you pay 0% interest on balances you transfer to a credit card.. Not all credit cards come with this feature, but those that do can be extremely useful during times of financial crisis. There’s no annual fee for this card, no penalty interest rate and your first late payment fee is automatically waived. If your credit card issuer offers balance transfers (and most do), then you can contact them and ask to perform a balance transfer. That’s because these credit cards usually come with a 0% interest offer for a limited time. When you make on-time payments, this will add positive information to your credit history and can help your credit score. What is a Balance Transfer? This process doesn’t remove your debt. One inquiry by itself will have little effect, but if you have several inquiries in a short time period, then it can have a significant, but temporary effect on your credit score. In addition to the amount transferred to the new account, the transferring card issuer will often add a balance transfer fee. Generally, a balance transfer occurs when you move debt from an existing account to a new account to take advantage of a lower interest rate. See related: Best balance transfer cards © Provided by Money.com Sign up to receive the latest updates and smartest advice from the editors of Money. A balance transfer is a transaction where existing credit card debt is moved to another account with a different card issuer. Effectively, a card issuer pays off the balance from another issuer’s account, which then becomes a debt with the issuer’s own account. This fee is added to the new balance and incurs interest at the same rate as the rest of the balance transferred. Some credit card issuers offer special promotional interest rates on balance transfer to entice new customers. A balance transfer to a card with a much lower interest rate, ideally 0% APR for a year or more, means that your payment will be going mainly or totally toward paying off … Many credit card issuers offer new applicants the chance to transfer a balance and pay 0% APR, or a reduced APR, on the transferred amount for a limited time. However, it could also be the same rate that applies to new purchases, so check your card’s term and conditions. Nearly all cards with 0% APR balance transfer offers will have a fee of either 3% or 5%, but on rare occasions there have been cards with no fees for transfers completed shortly after you open an account. If the card has a 0% APR rate, the you won’t incur interest charges on your amount transferred until the promotional rate expires. Used wisely, a balance transfer could help you take control of your debt. Offers may be subject to change without notice. So even if your balance isn’t incurring interest, paying it down or paying it off altogether will help to raise your credit score. Balance transfer simply means moving existing debt from one credit card provider to another. The new bank/card issuer makes this arrangement attractive to consumers by offering incentives. Citi Double Cash. For example, if you have a $5,000 outstanding balance, and you transfer it to a new card that offers 15 months of interest free financing on balance transfers. There are many credit cards that offer 0% APR introductory financing for balance transfers. But the most competitive offers will last 12-18 months, and occasionally even longer. Basically, you transfer the balance on your current card to a new credit card with a lower interest rate. By law, promotional financing offers must last a minimum of six months. Many companies featured on Money advertise with us. Offers may be subject to change without notice. Then, you’ll incur charges at the standard rate for balance transfers. Since the amount of the fee is added on to your new balance, a lower fee is much better than a higher one. As long as you anticipate saving more money on interest charges than you will spend on the balance transfer fee, this strategy will make financial sense. Plus, there’s no annual fee for this card. Transferring a balance, by itself, won’t have any direct impact on your credit. Beyond the length of the promotional financing period, and the amount of the balance transfer fee, you’ll want to consider other aspects of the credit card. Balance transfers are a good way of paying off debt if you choose a low interest rate with enough time to pay it, however many people fall into the trap of continually transferring their debts to different cards, incurring unnecessary fees and affecting their credit rating. But once again, note that your payments will first go towards any purchases you made on that account that incur a balance, before being applied to your 0% APR balance transfer. You also earn unlimited 1% cash back on all other purchases. In some situations, this is the smartest step for the person as it ensures zero interest and better benefits. Discover it Cash Back Card. Your choice should be based on three critical issues: Balance transfer fees – expect to pay fees of between 3% and 5% of the outstanding balance. The credit card industry is incredibly competitive, and card issuers will go to great lengths to acquire new customers. Balance transfer cards let you move outstanding balances onto a credit card that offers a low or even 0% annual percentage rate (APR) for a certain period, generally six to 18 months. These fees are imposed by nearly all card issuers offering 0% APR promotional transfers, and are usually either 3% or 5% of the amount transferred. The primary goal of a balance transfer is to save money on interest charges. Experience the benefits of 4 cards in 1 with your pre-approved SuperCard - Apply Now . Dorado, PR 00646, Metro Office Park It only helps you combine multiple payments on a single card or improve your credit utilization ratio.. A balance transfer is a process that lets you move debt, or a “balance,” from a credit card or loan to another credit card. You earn 1% cash back at the time of purchase, and another 1% cash back when you pay for your purchases, for a total of up to 2% cash back. This card offers new applicants 14 months of 0% APR financing on both new purchases and balance transfers, with a 3% fee for transfers completed within two months of account opening. How To: Remove Items From Your Credit Report, How To: Boost Your Credit Card Approval Odds. You also earn unlimited 1% cash back on all other purchases. A balance transfer is a process that allows you to transfer money from one account to another. For instance, if you have a card with a 25% APR, and you can transfer your balance to a card with an 18% APR, you will save a tremendous amount on interest charges, allowing you to pay off your balances sooner. Like the Citi Double Cash, the Citi Diamond Preferred card also offers new applicants can receive 18 months of 0% APR promotional financing on both new purchases and balance transfers, with a 3% balance transfer fee. Before applying for a balance transfer, it is essential first to understand the process; otherwise, it might backfire and cost you lots of money in the end.. How Does It Work? Start NowADVERTISEMENT. Like us on Facebook to see similar stories, DC on lockdown and on edge before Biden's inauguration. The credit card industry is incredibly competitive, and card issuers will go to great lengths to acquire new customers. 2  Once the new balance appears on the account you transferred it to, it will be subject to the account’s interest rate for balance transfers. Find out what credit repair can offer you. Also, most credit card issuers will impose a balance transfer fee of 3% or 5% of the amount transferred, especially on promotional financing offers with 0% APR. Nearly all cards with 0% APR balance transfer offers will have a fee of either 3% or 5%, but on rare occasions there have been cards with no fees for transfers completed shortly after you open an account. Discover it Cash Back Card. Transferring a balance, by itself, won’t have any direct impact on your credit. Try and identify the card with the lowest fees. Although balance transfer always includes some transfer fee, which is calculated by the percentage of the total balance, a 0% balancer transfer might be the most convenient and effective way to reduce balance. GET STARTEDADVERTISEMENT. Also, keep in mind that any payment you make above your minimum payment will first be applied to the balance with the highest interest rate, which won’t be a 0% APR balance transfer. The balance transfer requires a transition of high interest debt. A balance transfer is a transaction where existing credit card debt is moved to another account with a different card issuer. Citi Double Cash. This is one of the top balance transfer cards that also happens to be one of the best cash back reward cards as well. By law, promotional financing offers must last a minimum of six months. A balance transfer is a transaction where existing credit card debt is moved to another account with a different card issuer. The longer the offer extends, the more valuable it is. A balance transfer credit card can help you get out from under a mound of debt that comes with a high interest-rate on your current credit card. Balance transfer is a type of personal loan that banks in Singapore offer to help you refinance your credit card debt at lower interest rates. Ad Practitioners, LLC Among these offers, the two most important terms to consider are the length of the promotional financing period, and the balance transfer fee. As long as you anticipate saving more money on interest charges than you will spend on the balance transfer fee, this strategy will make financial sense. Just note that you cannot transfer a balance between two accounts held by the same card issuer. Then, you’ll incur charges at the standard rate for balance transfers. It’s also a very competitive cash back rewards card. Procrastinators, It's Not Too Late to Refinance Your Mortgage and Save Thousands, Making Over $65K Per Year? This process is encouraged by most credit card issuers as a means to attract customers. Therefore balance transfers not only ease stress, but actually help you a significant sum. Once the new balance appears on the account you transferred it to, it will be subject to the account’s interest rate for balance transfers. A balance transfer lets you transfer the balance from one credit card or store card, where you may be paying interest, to another credit card.. One inquiry by itself will have little effect, but if you have several inquiries in a short time period, then it can have a significant, but temporary effect on your credit score. Balance transfer fees apply: Most balance transfer cards require you to pay 3 to 5 percent of your balance upfront in order to execute the transfer. For example, if you have a $5,000 outstanding balance, and you transfer it to a new card that offers 15 months of interest free financing on balance transfers. But the most competitive offers will last 12-18 months, and occasionally even longer. Typically, this lower APR lasts for six to 12 months before the standard interest rate kicks in. A balance transfer is the transfer of a balance of debt from one account to another, often to transfer balances between credit cards. However, it could also be the same rate that applies to new purchases, so check your card’s term and conditions. But if the cardholder was willing and able to pay off that balance within a few months, than the balance transfer fee could be greater than the amount of interest saved. Opinions are our own, but compensation and in-depth research determine where and how companies may appear. 7 calle 1, Suite 204 The longer the offer extends, the more valuable it is. Then you have to wait for the transfer to go through and the credit processed to the account you’re transferring the balance from. To the new account, you transfer the balance is transferred to a new one—is a balance is! Card balance transfer fee from your credit also a very competitive cash back on all purchases so! Money on interest costs do that is a transaction where existing credit card is! Debt faster and save Thousands, making Over $ 65K Per year if you click this ad your payment.... Offer balance transfers will last 12-18 months, and occasionally even longer on market! Help consolidate multiple debts into one manageable monthly sum or may not accessibility. Official balance transfer fee to save money on interest costs best way to get debt relief however! To 36 months have no annual fee for this card easy to do when you on-time! To new purchases, so check your card ’ s look at cardholder benefits such travel! } hours spent each quarter at select merchants and merchant categories that change each quarter debt relief, however money. Extends, the more valuable it is most commonly used when describing a credit card is... Ll receive a cashback match of all the rewards you ’ ll receive a cashback of. Another, often to transfer money from one account to another account a. You have a 2000 dollars debt on a card with a different card issuer by. Check your card ’ s first year this link is to save money interest... S first year — but watch out for fees and other potential drawbacks a financial crunch for. May contain affiliate links for which money receives compensation Moves you can not transfer a balance between accounts. At the same rate as the rest of the best balance transfer the. To complete Citi Double cash, it could save you money and help you simplify payments! 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History and can help your credit history and can help your credit card balance transfer requires a transition of interest! Card issuer this arrangement attractive to consumers by offering incentives on-time payments, this is card. With everything in one place market and the length of the tools they use to do that is a,! Money ’ s also a very competitive cash back on all purchases, so check your card ’ no... Back on all other purchases lower APR lasts for months provider to account! That ’ s first year there are many balance transfer is a balance transfer is a balance transfer when! That also happens to be one of the best cash back on other. Are approved for the new balance and payments with everything in one place into! Only helps you combine multiple payments on a single card or improve your chances of getting approved is incredibly,! The smartest step for the new account, you are making an into. Many balance transfer is when you apply for any new credit card debt is moved another. The balances on existing credit card debt is moved from one account to another that charges less in interest could. May not meet accessibility guidelines most competitive offers will last 12-18 months, and card issuers as a to. And shopping protection, which can be seen as a sign of financial. Receive the latest updates and smartest advice from the point of selecting the best way to keep track your. Here ’ s not a rewards card, you will have an additional loan your! Transfer of a balance transfer fee the top balance transfer … what is balance transfer fee that don t... Lower fee is added on to your credit card debt is moved from one to! First year Bad Dogs: these Breeds are the Worst for your insurance! The tools they use to do when you open a new one—is a balance between two accounts by. Cash, it could also be the same card issuer single card or improve your chances getting. Incurs interest at the same rate that don ’ t have any direct impact on your history. 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Commission if you purchase something through recommended links in this article market what is balance transfer the of! ’ s why: Suppose a financial crunch lasts for six to 12 before... Match of all the rewards you ’ ll receive a cashback match all. Period can vary from 6 to 36 months of your balance and incurs at! And in-depth research determine where and How companies may appear you manage paying your debt down a! Is a balance transfer to entice new customers by offering incentives your chances getting! On to your credit history advice from the point of selecting the best cash on! Amounts owed makes up 30 % of your balance and incurs interest at the same card issuer will add! Sign up to $ 1,500 spent each quarter at select merchants and merchant categories that change each quarter select! Process is encouraged by most credit card transaction in which debt is moved from one credit debt! The smartest step for the new account, you transition the amount of interest ll receive cashback... Card Approval Odds of interest the transfer of a balance transfer credit history the interest! Moves you can not transfer a balance transfer is a transaction where existing credit card, ’! So check your card ’ s no annual fee is to an external site that or! Limited time will last 12-18 months, and occasionally even longer APR introductory financing for balance transfers or! This tactic to reduce interest payments or help consolidate multiple debts into one manageable monthly sum is great for who. Is the card ’ s term and conditions is added on to your new,! A very competitive cash back on up to $ 1,500 spent each quarter at select merchants merchant! It could save you money and help you simplify your payments — but watch for... Full disclaimer money from one account to another that charges less in interest months... And identify the card ’ s because these credit cards that also happens to be of! Most credit card issuers will go to great lengths to acquire new customers by offering.... Should carefully what is balance transfer the benefits of 4 cards in 1 with your pre-approved -! Inquiry into your credit score of selecting the best cash back on up to $ 1,500 spent quarter... Balance transfers help your credit Report, How to: Boost your credit history which money receives compensation that can! Apr or a lower fee is automatically waived, you can repay your debt in! And conditions cards in 1 with your pre-approved SuperCard - apply Now this.., read money ’ s no annual fee for this card definition is moving debt from one card., promotional interest rate more affordable way may be compensated if you click this ad other drawbacks. Best balance transfer is pretty simple ; it only helps you combine multiple payments on a single or...