Credit Card Balance Transfers: Can You Really Ditch Interest Fees For Good?

    By Jason Bushey | Small Business

    Credit cards that offer 0% interest on balance transfers are perhaps the best debt consolidation tools available to everyday credit card consumers. And yet, odds are the average consumer isn’t even aware that they can move that credit card balance that’s gathering interest and draining their wallet to a new card with zero interest for a specific number of months.

    The fact of the matter is transferring your credit card balance to a new, 0% credit card is a no-brain’er if you’re racking up interest fees. If you’re not sure how to make a credit card balance transfer, here’s how it works.

    First, you might notice that paying your monthly minimum payment is getting you absolutely nowhere when it comes to paying down your debt. That’s because of interest, and the sooner you identify this as a problem, the quicker you’ll find a solution. And your solution – apart from paying off your debt in one lump sum – is to transfer that balance to a new 0% interest credit card.

    Compare credit cards that offer 0% interest on balance transfers for 6, 12 or 18 months, and determine which card works best for you. For instance, if you need considerable time paying down debt, maybe you’ll want to consider a card with a longer intro period.  Once you’ve found the card that looks right for you, the next thing to do is apply for that card. If you have average, good or excellent credit, you shouldn’t have an issue getting approved for a balance transfer card. For poor credit consumers, getting approved for a balance transfer card is more challenging, which is why you want to transfer your balance sooner (to lower interest rates and pay down your debt) rather than later (when it’s too late).

    As soon as you receive your credit card, go online or call up your new credit card company to transfer that balance. From there, it should take 7-14 days for your new credit card company to pay off your old card. (They usually snail mail them a check the old fashioned way.) So if you have a bill coming up on your old card, don’t forget to make a payment.

    Once you’ve confirmed that your balance has officially been transferred, it’s time to take advantage of that 0% intro period as much as you can. This means making credit card payments a priority; pay more than your minimum and, if you can, make multiple payments throughout the month. The benefit of doing this is twofold since you’re paying down your debt and lowering the amounts you owe while further establishing your payment history – both of which are crucial to improving your credit score.

    OK, so you transferred your balance and paid down as much of your debt as you could but you’re still carrying a balance and the intro period on your card is set to expire. Should you consider transferring your balance again? The answer is … Maybe.

    Depending on how many cards you own (three to five is ideal), you’ll have to weigh the pros and cons of opening up yet another line of credit. Generally, opening up a new credit line can give your score a boost, and there’s no negative to having multiple accounts in good standing. But you don’t want to get in the habit of transferring your balance over and over.

    What you DO want to get in the habit of, however, is paying down your debt to the best of your ability. While balance transfer cards can help you ditch interest for an extended period of time, the only way to kick interest rates completely is to carry a balance of zero each and every month.

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