You can save money with a balance transfer card by transferring high-interest debt from an existing credit card and paying down the balance at a lower interest rate. Many balance transfer cards offer an introductory 0% APR, which allows you to pay off the balance interest-free over the length of the offer. To maximize savings, be sure to pay off the transferred balance before the regular APR kicks in. Using a balance transfer calculator can help you plan things out.
How to Save Money with a Balance Transfer Card
- Compare Balance Transfer Offers
- Pay Attention to the Balance Transfer Fee
- Use a Balance Transfer Calculator
- Pay Off the Entire Balance Before the 0% APR Promotional Period Ends
- Avoid New Purchases While You’re Paying Off a Balance Transfer
- Don’t Repeat Past Mistakes
Money-Saving Tips for Balance Transfer Credit Cards
Compare Balance Transfer Offers
All balance transfer offers are not created equal. At a minimum, you will want a balance transfer card with a 0% APR on balance transfers, for long enough to pay off your debt with affordable monthly payments. Look for offers with the lowest possible fees, too, and pay attention to the card’s regular APR if it might come into play.
Typically, you will need at least good credit to get approved for a balance transfer credit card that will save you money. Offers may be available to people with lower scores from time to time, however, particularly students. You can check your latest credit score for free on WalletHub.
Pay Attention to the Balance Transfer Fee
Most balance transfer cards will charge you a 3% to 5% fee on each balance you transfer. Some credit cards have no balance transfer fee, but read the fine print carefully, as there may be a deadline by which to complete the balance transfer before the promotional offer expires. Also, bear in mind that credit cards offering no balance transfer fee and a 0% APR on balance transfers are few and far between.
Use a Balance Transfer Calculator
A balance transfer calculator estimates your projected payoff date and how much you’ll save on interest. The calculator can also help you map out an affordable payment plan. Simply enter the amount of the balance you want to transfer, the card’s interest rate and transfer fee, if applicable, and how much you plan to pay every month.
Pay Off the Entire Balance Before the 0% APR Promotional Period Ends
Make your payments on time each month, preferably for more than the minimum amount due. One late or missed payment could mean losing the remainder of your introductory rate. Additionally, if you have an unpaid balance after the 0% APR expires, the remaining balance will accumulate interest at the card’s regular interest rate.
Avoid New Purchases While You’re Paying Off a Balance Transfer
Unless the card has a 0% purchase APR that lasts for as long as its 0% balance transfer APR, interest charges will immediately apply to any new purchases you make until you pay the balance – including your outstanding balance transfer amount – in full.
Don’t Repeat Past Mistakes
The point of a balance transfer card is to help you get out of debt faster – and more cheaply – by not having to pay as much interest. But you could easily find yourself in the same position if you repeat the same mistakes that got you into debt in the first place.
Once you transfer a balance, it’s critical that you resist the temptation to rack up a new round of unaffordable debt. And as you get closer to paying off that balance transfer, think about how you’ll stay on track once you’re finally debt-free.
Our budgeting tips page is a great resource to help you get started.
Which Balance Transfer Card Can Save You The Most Money?
Debt can be a headache, but with a little bit of planning, a balance transfer card can save you a ton of money in the long run. To help maximize the amount of money you’ll save with a new balance transfer card, check out WalletHub’s Best Balance Transfer Credit Cards page. You can compare offers with highly-sought-after features such as introductory 0% APRs, no balance transfer fees, and reasonable regular interest rates.
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