Adam McCann, Financial Writer
@adam_mcan
The catch with a balance transfer credit card is that you'll likely have to pay a balance transfer fee of 3% or more, and you might not save money once the 0% APR period ends because interest charges will apply to any remaining balance. You also need to have good credit to get a 0% balance transfer card in most cases.
Things You Could Consider a Catch With Balance Transfers
Fees
Not all balance transfer cards charge a balance transfer fee, but most do. This fee is typically 3% to 5% of the total balance transferred, and the average is 3.33%.
Expensive regular APRs
Many balance transfer credit cards offer introductory APRs of 0% for 6 to 21 months on transferred balances. But after this period expires, any remaining balance is subject to an expensive regular APR, which is 22.35% on average.
Limits on the types of balances you can transfer
Different credit card companies allow you to transfer different types of debts to their credit cards. It’s important to find out which types of debts are eligible before you apply for a specific credit card.
Temporary credit score damage
When you apply for a new balance transfer credit card, the hard inquiry into your credit report will cause your credit score to drop by around 5 to 10 points. Luckily, you can recover from this with a few months of responsible credit use.
The good news is that the benefits of balance transfer credit cards outweigh the drawbacks. Balance transfer credit cards can help you save a lot of money on interest and get debt-free sooner. You can also use these cards to consolidate multiple debts into one monthly payment.
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People also ask
Do balance transfers hurt your credit?
Yes, balance transfers do hurt your credit when you open a new credit card account to do the transfer. Applying for a balance transfer credit card will generate a hard inquiry on your credit report, causing a slight dip in your credit score.
If you transfer a balance to an existing credit card account, however, there is no hard inquiry and no credit score damage. A balance transfer could still result in high credit utilization, though, and allow you...
read full answer by WalletHub, Financial CompanyAre balance transfers bad?
No, balance transfers are not inherently bad, but they can be bad for your finances if used recklessly. When you transfer a balance, you're ideally shifting high-interest debt to a credit card with a lower interest rate.
How Balance Transfers Work
The best balance transfer credit cards feature 0% APR offers for a specific number of months, but these introductory APRs eventually expire.
If there's a balance remaining at the end of the introductory period, it will accrue...
read full answer by Bogdan Roberts, Credit Cards ModeratorIs it a good idea to do a balance transfer?
Doing a balance transfer is a very good idea if you need multiple months to pay off high-interest debt and you are able to qualify for a 0% balance transfer credit card. Most balance transfer cards require a 700+ credit score (at least good credit) for approval.
What you should know before making a balance transfer:
- You generally need good credit or better to get a 0% balance transfer credit card.
- Most balance...
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