How to Transfer Credit Card Balances to a New Card

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How to Transfer Credit Card Balances to a New Card

Have you just been accepted for a new credit card that offers 0% interest on balance transfers? This introductory discount is often only available for a limited time. Following that, the interest rate on balances will very definitely rise.

So, how do you transfer a credit card balance from one to another? Here are ten steps for transferring a credit card debt from an old card to a new one with a reduced interest rate.

Key Takeaways

  • Choose one or more cards with the highest interest rates and transfer balances to those cards first, if the increased credit limit allows.
  • Read the fine print and take notice of the balance transfer cost.
  • The rules will normally demand that the balance transfer be completed within a specified number of days, usually within 60 days of account establishment.

1. Choose the Balances to Transfer

What is the procedure for transferring credit card balances to another card? To begin, a customer should establish a list of all credit cards, including outstanding balances and interest rates. Choose one or more cards with the highest interest rates and transfer balances to save money on interest.

If someone’s new spouse has a high-interest credit card bill and they have good credit, a 0% APR balance transfer offer may pay off an old amount and enable a pair start over together with lesser costs.

2. Calculate the Fee

Take notice of the balance transfer cost in the small print. This charge must be paid in advance on the transferred amount. The charge is usually approximately 3% (or $30 for every $1,000 deposited), but it may go up to 5%.

Will a cardholder still come out ahead after the balance transfer charge with the new, lower interest rate? To calculate the arithmetic, use a free online balance transfer calculator.

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3. Understand the Penalties

To preserve the promotional rate, transferring a debt at 0% needs a minimum monthly payment on the balance. A critical question: What interest rate applies if a cardholder loses the 0% rate due to a missing payment? Will the penalty rate be higher than the cardholder’s pre-transfer rate? Before taking such a risk, a customer must analyze their payment history honestly.

4. Know When the Promotion Ends

How long is the 0% rate valid (it might be good for 6, 12, 15, 18, or even 21 months)? If a cardholder intends to pay off a transferred debt during an introductory period, they should consider whether they will be able to do it in full during that time. If not, what interest rate will apply after the promotional period expires? How high can the variable rate go and how often can it change?

5. Watch the Time Limit to Transfer

If a cardholder opens a new credit card account to take advantage of a 0% annual percentage rate on transfers, the rules will require the balance transfer to be completed within a specified number of days to earn the promotional rate, often within 60 days of account establishment. Finish the transfer the day after the window ends, and the standard balance transfer rate will be applied.

6. Meet TransferRequirements

If the new account is with the same firm that owes the sum, a balance transfer is not possible. A past-due payment with the creditor who would receive the transferred sum, as well as the cardholder’s bankruptcy, may also prevent the transfer.

7. Decide How Much to Transfer

Check the new card’s credit limit; a debt transfer cannot exceed the allotted credit line. Balance transfer costs also count against that limit. For example, if a cardholder has $10,000 in available credit, transferring a $10,000 amount with a 3% balance transfer charge is not possible. To complete the deal, they’d need $10,300 in available credit.

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8. Determine the Destination of Funds

Should the cash be sent immediately to the high-interest credit card in order to pay off any outstanding balance? In rare cases, the cardholder may be able to deposit the check into their bank account, although this is difficult. Check the credit card agreement to ensure that payments put to a bank account are not deemed a cash advance. This might generate a lot of interest in the deal.

Before transferring a credit card debt, ask questions. When the promotional time expires, what interest rate takes effect? How high can the variable rate go and how often can it change?

9. FollowCreditor Instructions

Each credit card issuer will have its own set of balance transfer guidelines. Here are several possibilities:

Checks for balance transfers The cardholder receives checks from the new card issuer (or the issuer of the card to whom the amount is being transferred). The cardholder then writes a check to the credit card company. Some credit card issuers may allow the cardholder to make the check payable to themselves, but this must not be considered a cash advance.

Online or phone transfers The cardholder provides account information to the credit card business to whom they are transferring the debt, and that firm arranges for money to be sent to pay off the account. For example, if you are paying off a $5,000 balance on a high-interest Bank of America Visa card and transferring that balance to a Citi MasterCard with a 0% APR balance transfer offer, you would provide Citi with your Bank of America card’s name, payment address, and account number, as well as the amount you want paid to that Visa account.

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Deposit through direct deposit. The cardholder must have the bank account and routing information of the account into which the balance transfer monies are to be deposited available.

10. Watch for the Transfer to Clear

Keep a watch on each old account with a paid-off balance to see when the transfer is completed. Meanwhile, prevent late penalties by not missing any payment dates on those accounts.

Allow two to three days (up to ten) for the new creditor to pay off the previous creditor. Each creditor has its own deadline for completing a balance transfer. Keep a watch on the new account to see when the amount has been transferred, and consider canceling the old one to minimize the temptation to use it again and incur further debt.

However, if you’ve had the old card for a long time, it may be prudent to keep it open and be careful not to incur further debt. The explanation is that your credit score is affected by the duration of your credit history. Closing the account may result in a shorter credit history and a worse credit score.

The Bottom Line

Transferring high-interest debt to a credit card with 0% interest may help you save money and make it simpler to pay off an amount. Following these procedures, as well as modifying spending habits, may help a customer become more financially healthy than they were before the balance transfer.

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