Carrying a balance on a credit card isn’t necessarily a bad thing. But it can be costly, if your interest rate is high. If you don’t pay your entire credit card balance off each month, it’s important to pay attention to the annual percentage rate (APR) on your credit card. Applying for a new credit card with a zero-interest balance transfer offer can be a great way to save money and pay your balance off faster.
If you’re not sure whether a balance transfer credit card is right for you, read through this list of benefits you could enjoy when you open a new line of credit with a balance transfer offer.
• You’ll pay off your card faster. When you’ve got a credit card that charges interest—whether it’s a low rate or a high rate—it’s going to take longer for you to pay off your entire balance. Each month, interest is added to your balance due, increasing the amount you owe. So switching to an interest free card is going to help you pay down your balance faster by allowing your entire monthly payment go toward your balance owed, not the interest being charged.
• You’ll save on interest. As noted above, when your interest rate is high, you’re paying extra every month. So over the long haul, you’ll end up paying more than just the amount you charged to your card. You’re paying off your card faster because you’re actually saving money. Check your credit card statement. Federal guidelines mandate that it has an information box on it, telling you how much you’ll pay over time if you only pay the minimum due each month, and don’t make any more purchases. Usually, it’s thousands of dollars more, and many years longer. Transfer your balance and it’s a whole new ball game.
• Your credit score may improve. One factor in your credit score is how much you owe relative to the amount of credit you have available. If you open up another line of credit, you’ll have more available credit, automatically shifting that ratio in your favor. While it’s true that opening up a new credit card can sometimes negatively impact your credit score, this is generally only a problem if you’re applying for a lot of cards in a short amount of time, or getting turned down for a credit card. If your credit is fair or good, you have more to gain and less to lose from opening up another card and transferring your balance.
• It’s fast and easy. There are tons of offers to choose from, and the process of transferring your balance is quick and easy. You can do it online in a matter of minutes, or over the phone. First, choose an offer with a low balance transfer, a great promo offer, or both. Gather up your information from the credit card you’d like to transfer your balance from. Have your personal information ready as well. Then you’re ready to start the transfer.
Transferring your balance to a new card has lots of benefits and few, if any, drawbacks. So what are you waiting for?