When you find yourself overwhelmed by debt, it's time to look for options to pay it off. If it's credit card debt, you could always pay it off with savings. But what if you don't have any savings? Well, another option is to utilize a balance transfer credit card. But knowing how to use balance transfer cards will help you take advantage of reduced interest, while helping you to pay off debt faster. Here are 7 tips to help you do just that...
Every step you take for paying off debt is a promise to yourself. The process of using balance transfer credit cards starts by keeping the promises you make to yourself. Develop a budget and stick to it! Have a repayment plan before you make the transfer. Creating a plan and being steadfast in following it will enable you to pay off the debt that may be overwhelming you. Planning is vital when mastering the art of using balance transfer credit cards. The good news is, you're already planning by utilizing the tips in this article!
2. Your Score
With a plan in place, the next thing to consider is the importance of knowing your credit score. Most promotional 0% balance transfer offers are contingent on your creditworthiness. If you have excellent credit between 720-850, it's likely you've received a balance transfer offer in the mail, and obtaining that advertised offer will not be difficult. For people with great credit, a balance transfer offer will help reduce the balance you have on cards with a high interest rate and a high balance. However, if you know your credit score is less than 720, you may not qualify to receive the 0% APR introductory balance transfer offer. The terms offered to you may involve a different introductory APR, a shorter introductory time frame, or you may not be granted the full balance transfer you're seeking.
Balance transfer fees can quickly eat up any savings you may get with a balance transfer. Although you want to manage your debt, don't forget to factor in fees. Calculate what you will save with the 0% APR offer to see if the amount is greater than the fee. There is only one credit card that does not charge a balance transfer fee: The Chase Slate®. All other balance transfer credit cards will charge you a 3-5% fee. The fee is added to the balance you transfer to the card.
4. Time is a Gift
When it comes to balance transfer cards, the amount of time you have at a 0% rate is truly a gift. Because the length and terms of 0% APR promotional offers differ, make sure you know how much time you have to pay off the transfer amount before you begin accruing interest. Depending on the card, you may be gifted with 12-21 months to pay off that balance transfer without paying any interest.
5. Research Cards
As important it is to keep promises to yourself, it's just as important to plan for the future. Researching the right card and promotional offer is essential to saving the most money while managing your debt. Make sure to read the fine print before you apply. And keep in mind that applying for a balance transfer credit card will place a hard inquiry on your credit report, which could affect your credit score. As you use the card to pay off debt, consider what got you into debt in the first place. Read up on financial planning and budgeting to avoid making the same mistakes twice.
6. Use it as Tool
Many 0% promotional offers apply not only to balance transfers but also to purchases. As tempting as that may be, stay focused! You're seeking to pay of off debt. Use the balance transfer card as a tool. Don't use it to make purchases while you are paying down the balance. Once you've accomplished your goal, celebrate your achievement! But don't go shopping...
7. Check, Please!
Paying off debt with a balance transfer card doesn't need be limited to credit card debt. When you're ready to apply for the card that best serves you, ask for paper checks. If you got an offer in the mail, it likely came with two attached to the offer. Checks will give you the opportunity to pay off any debt—student loans, car loans, medical bills—all while taking advantage of the 0% promotional offer. Use them wisely!