A balance transfer can much valuable as a tool to help you get rid of high-interest credit card debt. Luckily, most of credit card issuers offer balance transfer credit cards with introductory zero percent APR periods, allowing you to pay down what you owe at a free interest.
The right introductory APR offer also gives you an opportunity to prevent yourself from being charged too much on the interest while you are working to pay off your transferred balances. This period gives you time to pay down you debt quicker while you can also save your money.
Wondering how it works? Check out our review below on how to invest in balance transfer that is going to discuss not only the simple tips for investing but also other information that is much related with the topics.
Balance Transfer Preview
There are always pros and cons of the things in an individual personal finance. Balance transfer have also both of them that are worth to take into account. A balance transfer credit card can be much of advantage if you have high-interest debt and you takes time to pay it off. Thus, you had better evaluate your financial condition to know whether you are in the right position to carry out the transfer before you decide on the investment.
If you have less than $10,000 debt, then a balance transfer is the best way to help you pay it off either using a single or multiple cards or various credit accounts. However, if $10,000 is at the high end, you won’t be able to do balance transfer higher than your credit limit.
It is pretty easier to qualify for a top-rated balance transfer credit card as long as you have an excellent FICO score that is between 670 and 850. You might be able to find the one below 670 but it might have only a shorter intro period. This means that you have only a shorter time to pay off your debt. Therefore, you may have to struggle harder to pay down your debt before running out of the intro period.
How To Invest In Balance Transfer
Balance transfer is best described as one of the great ways to gain a grasp on debt due to its ability to fill the high interest rates. In our article, we have summarized the 4 easiest ways to invest in balance transfer. First, create a balance card online. Second, transfer the balance to the new credit card. Third, wait for the transfer to process and fourth, pay off your balance finally.
Now check out the detailed review of each of the easiest ways we have mentioned:
Create A Balance Transfer
The primary thing to do in finding the way on how to invest in balance transfer is to create a balance transfer card. These cards can be issued online only in a couple of minutes. To create, you need to give some basic personal and financial information including your name, address, social security number and income.
Mostly, you will start the process of balance transfer as a part of your card application. The balance transfer credit card may require you which balances you are willing to transfer to your newly issued card. Thus, make sure that you make your information ready.
Keep in mind that there might be a hard inquiry report when you are creating a balance transfer credit card. This may also give you a temporary effect on your credit score. However, you can improve your credit utilization ratio and have a positive effect on your credit score by increasing your credit with your new balance transfer credit card. This may take a long process.
Once you created a new balance transfer credit card, you will find out that you have approved well. If you have not been notified yet, check with your email from the company issuing your credit card. If you are notified “pending” or “under review”, be patient as your balance credit card will be issued or processed within a few days.
Transfer the Balance to The New Credit Card
It is pretty simple to transfer the balance to your newly issued credit card. While each process of issuing balance transfer credit card is different, you will usually be required to transfer online, simply on your smart phone.
Be sure that you are ready with your basic information about the credit cards to which you will transfer the balances from. It usually includes the card number and the amounts you are going to transfer to your new credit card.
If you need to ask for help dealing with the process of transferring the balance to your credit card, you can easily contact the customer service line for assistance.
Wait For The Transfer To Process
The third way on how to invest in balance transfer is waiting for the transfer to process the transfer. Remember, everything takes time. It can take around seven days to even a month to transfer your balance to your new credit card. In this period, you may use your old credit card until your balances are fully transferred to your zero percent APR credit card. If you don’t, you are at a risk of losing your new interest charges and fees available on your old cards because of the missed payments.
Once the transferring process is complete, check with your credit card issuers to ensure the zero balance on your accounts. Once you confirm it, you can stop making payments.
Pay Off Your Balance
The last step you must follow to invest in balance transfer is to pay off your balance finally. See how much you transferred on the new card and start using your balance transfer credit card to pay off your debt by making payments on that card.
Ensure that you can put the zero percent APR introductory offer in order that you can pay off your debt. Before applying, you will be required to create a debt payoff plan. This way, if you want to pay off your debt faster, you should put more money on your balance transfer every month.
Each dollar you pay in your zero percent APR period offers the bigger impact because the 100 percent of it will pay the balance you owe. These are not the interest payments.
So check with your monthly budget and find any areas where to reduce your spending temporarily. Control the way you spend will actually help manage your current debt. This is one of the good ways to develop healthy money habits so you can avoid going into the debt in the future.
How To Choose A Balance Transfer Credit Card
As there are varieties of credit card types available to choose from, some with the rewards and some other with the perks, you need basically the tips to lead you to choose the best option that help you pay down your balances you have on other cards,
Ideally, the best balance transfer credit card offers a 0 percent APR for a limited time. In relation to how to invest in balance transfer, here are the tips on how to choose the best balance transfer credit cards in our consideration.
Check Your Credit Score
As we have mentioned earlier, credit score must be higher than 670. If your credit score is just below 670, that probably means that you have a poor credit, making it less attractive to create terms and conditions for paying off the debt.
Compare Card Offer Details
There are some factors that are important to consider when it comes to transferring balance or debt from one card to another. Those are as follows:
- Length of the introductory period
21 months is considered the best balance transfer credit card with zero percent introductory APR on the transferred balance.
- Regular APR
The interest rate can negatively kick at the end of your introductory period, giving you an impact on your remaining balance and future balance. Consider the interest rate that is above 16 percent.
Balance transfer fees are typically 3 to 5 percent of the transfer amount. So, think of another fee including the annual fee.
- Introductory APR on purchases.
Some balance transfer credit cards also offer a zero percent introductory APR on purchases though focusing on paying the old debt is less important.
Pick Up A Card with Rewards and Perks
Compare cards based on the rewards and perks offered. This is considered good if you want a balance transfer that is worth to keep for the long period. Many top balance transfer credit cards offer even a cashback on your expenses along with the number of feature insurance protections that you can utilize fir everything you purchase for a better deal.
Find Out The Amount of Your Debt
Take your time to find out the amount of your debt and think of the possibility of consolidating the debt from some credit cards onto one new balance transfer credit card. This will help you in how long you take for processing the debt payment.
After all, consider paying off %55,000 in credit card debt at zero percent APR so you will have a less time to pay the debt.
Consider Taking Alternatives
When investing in balance transfer doesn’t seem helping you pay down your debt, consider taking alternatives such as taking personal loans for consolidating and paying down the debt. Personal loan offers a monthly payment along with the repayment timeline so you have the definite plan to pay off your debt.
The Best Balance Transfer Credit Cards
Now that you understand fully the steps on how to invest in balance transfer and the tips to choose a balance transfer credit cards, next you should have idea of which cards that might be best you consider taking.
If you want the best balance transfer credit card for rotating rewards, pick up Discover it Balance Transfer and Citi Double Cash Card for the best option to gain flash-rate cash back. Meanwhile, Citi Diamond Preferred Cards is the card that offers the longest 0% intro APR if you want a longer period.
The overall impression on how to invest in balance transfer is ensuring that it is pretty easy to consolidate and pay off the debt while you can still save money on interest. The amount of debt and the height of your credit card score give you an effect whether investing in balance transfer is a good option.
If your credit score is higher than 670 and you have not more than $10,000 in debt, a balance transfer is probably the perfect tool to help get rid of the debt.
More importantly, it is recommended to maintain the healthy financial habits by transferring the minimum payment each month (If you cannot pay more), then you will be able to pay down your balance interest free. In this regards, take the benefits of zero percent APR period to maximize the benefits.