If you have good credit, you may qualify for a balance transfer offer. But what is that, why would you need it and how do you use it responsibly?
It’s the transfer of an existing balance from one credit card or account to another, usually to save on high-interest payments. Balance transfers can often help you both consolidate debt and pay down debt faster.
The balance transfer process is relatively simple. You just move an outstanding balance from one card to another. Most of the time, there is a fee attached. This is usually either a percentage of the balance transferred or a fixed amount.
People are often drawn to balance transfers from credit card companies that offer 0% or low interest rates. These transfers encourage consolidation of balances on to one credit card. Just keep in mind that promotional rates last for a limited time before they rise.
As Consumer Reports points out, the challenge some people may face is paying off the balance before the rate adjusts. This is often easier said than done. If you’re considering this course of action, make sure you have a solid budget in advance, with a plan for all your payments.
To make the best selection for a balance transfer, consider the following:
You should also ensure you can meet minimum payments and any interest obligation if you do not plan to pay off balances entirely.
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