If your credit card issuer offers balance transfers (and most do), then you can contact them and ask to perform a balance transfer. A balance transfer is a transaction where existing credit card debt is moved to another account with a different card issuer. 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. You should carefully consider the benefits and downsides to balance transfers before initiating the process. This type of transfer is great for people who have a high-interest debt to pay down, as it brings money-saving benefits. How a Balance Transfer Works. Many companies featured on Money advertise with us. In some situations, this is the smartest step for the person as it ensures zero interest and better benefits. For more information, read Money’s full disclaimer. So, what is a 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. Basically, you transfer the balance on your current card to a new credit card with a lower interest rate. It only helps you combine multiple payments on a single card or improve your credit utilization ratio.. Then you have to wait for the transfer to go through and the credit processed to the account you’re transferring the balance from. 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. For example, say that you have a 2000 dollars debt on a card with 12% APR. You also earn unlimited 1% cash back on all other purchases. For those paying down high-interest debt, such a … 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). Like us on Facebook to see similar stories, DC on lockdown and on edge before Biden's inauguration. There are many balance transfer offers on the market and the length of the promotional period can vary from 6 to 36 months. This is easy to do when you open a new account that offers 0% APR promotional financing on balance transfers. The other major factor is the card’s balance transfer fee. Among these offers, the two most important terms to consider are the length of the promotional financing period, and the 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. 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. When you apply for any new credit card, including a balance transfer card, you are making an inquiry into your credit. It is most commonly used when describing a credit card balance transfer. However, it could also be the same rate that applies to new purchases, so check your card’s term and conditions. 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 … Apart from a low interest rate, certain balance transfer … Generally, the 0% or low introductory interest rate on a new account will last for a limited amount of time (typically six to 18 months). This fee is added to the new balance and incurs interest at the same rate as the rest of the balance transferred. Try and identify the card with the lowest fees. 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. 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. 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. Opinions are our own, but compensation and in-depth research determine where and how companies may appear. What Is a Balance Transfer? 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. Then you have to wait for the transfer to go through and the credit processed to the account you’re transferring the balance from. Microsoft may earn an Affiliate Commission if you purchase something through recommended links in this article. Transferring a balance, by itself, won’t have any direct impact on your credit. A balance transfer is when you pay off the balances on existing credit cards or loans by transferring them to another credit card account. 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. Among these offers, the two most important terms to consider are the length of the promotional financing period, and the balance transfer fee. It’s also a very competitive cash back rewards card. Balance transfer simply means moving existing debt from one credit card provider to another. For more information, read. If your credit card issuer offers balance transfers (and most do), then you can contact them and ask to perform a balance transfer. The Citi Double Cash card also offers up to 2% cash back on all purchases, with no limits. One of the tools they use to do that is a balance transfer. Since the amount of the fee is added on to your new balance, a lower fee is much better than a higher one. The new bank/card issuer makes this arrangement attractive to consumers by offering incentives. 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. What Is a Balance Transfer and How Does It Work? By law, promotional financing offers must last a minimum of six months. 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. With a balance transfer, you transition the amount you owe from one card to another. The credit card industry is incredibly competitive, and card issuers will go to great lengths to acquire new customers. This could be 0% APR or a lower, promotional interest rate. 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. 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