In this day and age, it’s more important than ever to be financially savvy. One way to do this is to take advantage of balance transfer credit cards. These cards can help you save money on interest and pay down your debt faster. But how do you make sure you’re getting the most out of your balance transfer credit card? Keep reading to find out.
Find a card with a long 0% APR period.
Balance transfer credit cards offer a way for consumers to move their existing credit card balance to a new card with a lower interest rate. This can save consumer money by reducing the amount of interest they pay on their debt each month. Some balance transfer cards offer a 0% APR promotional period for new cardholders, which means that the consumer does not have to pay any interest on their transferred balance during that introductory period. If you need some help choosing a card, Wells Fargo Reflect Card offers the best long intro APR period, according to Forbes.
With this card, new cardholders get an intro APR of 0% for 18 months on both balance transfers and purchases. After that, the APR will be 15.49% to 25.24%, depending on your creditworthiness. This card also comes with no annual fee.
It is important to make sure that you can afford to pay off your entire transferred balance before the promotional period ends, as otherwise you will be charged retroactive interest on all of the transferred balances. If you don’t pay it off, you’ll likely end up with a higher interest rate and could wind up paying more in balance transfer fees and interest than if you had just kept your original card.
Follow these tips to make the most of your balance transfer.
To get the most out of your balance transfer credit card, it’s important to understand how these cards work. Below are some tips.
Transfer as much of your existing balance as possible. The promotional interest rate usually only applies to the transferred balance; any new purchases made with the card will typically have a higher interest rate. So, try to transfer as much of your existing balance as possible to take advantage of the lower rate.
Watch out for fees. Many credit cards charge a balance transfer fee, typically around 3% of the amount transferred. So, if you’re transferring $5,000, expect to pay around $150 in balance transfer fees. Make sure that the savings from the promotional interest rate outweigh any fees associated with the transfer before proceeding.
Don’t close your old account until the transferred balance is paid off. To avoid hurting your credit score, it’s best not to close old accounts until all debts have been paid off. Keep in mind that closing an account will also cause your available credit limit to drop, which could impact your credit utilization ratio—another factor that lenders look at when assessing your creditworthiness.
Understand the terms and conditions.
When considering a balance transfer credit card, it is important to understand the terms of the deal. Many people are lured in by introductory 0% APR rates but fail to read the fine print and wind up with surprises on their bills.
Something to keep in mind is that the 0% APR rate only lasts for a certain amount of time. After that period expires, the interest rate will jump up to whatever the regular interest rate is on the card. So make sure you know how long the promotional period lasts and can pay off your entire transferred balance before that time runs out.
Overall, it is important to get the most out of your balance transfer credit card to save money and improve your credit score. This can be done by taking advantage of the promotional APR period, making sure to pay on time, and not overspending.
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