When you’re trying to get out of debt, opening up a new credit card account might feel counterintuitive. But if you’re carrying balances on several credit cards, or even one large balance on a credit card with a high APR, you could benefit from applying for a balance transfer credit card. Here’s everything you need to know about paying down your debt faster with a balance transfer.
Step One: Take stock of your debts. Gather up your credit cards, bills, financial documents, log on to your credit card account pages, or whatever you need to do in order to make a list of what you owe. Write down each balance and what the APR is for that card. Now, put them in order. You can do this one of two ways: list the balances in order from highest to lowest, or list them in order of APR, high to low.
Step Two: Decide which balances to transfer. Anything that is higher than a 0% APR (which is probably all of your balances) should be considered potentially transferrable. Since there are so many credit card offers out there that give you several months to over a year with no interest, there’s really no reason to keep paying interest on any of your cards. Likewise, any balance that is significant (for example, it would take you more than six months to pay off) is a good candidate for a transfer.
Step Three: Find some balance transfer offers. Look over a bunch of different credit card offers, use a balance transfer finder or calculator, or go with an offer from a card issuer you like. Just remember, you’ll need to transfer your balance to a different type of card than the one it’s currently on. For example, you can’t transfer a Chase Freedom balance to a Chase Slate card, or a balance from one American Express card to another type of Amex card. Take a look at how long the introductory 0% APR period is, and how much the balance transfer fee will be. Take note also of what the ongoing APR will be after the promotional rate expires.
Step Four: Apply for a balance transfer credit card. Once you’ve chosen a card that meets the parameters you’re looking for, go ahead and fill out an application. It’s easiest to do this online. Have all your credit card information from the card or cards you’re transferring balances from on hand. You’ll need it to fill out the application, as you’ll want to go ahead and process the balance transfer request along with the application.
Step Five: Keep paying your minimums. You may or may not be approved for the new card and the balance transfer immediately. While you are waiting to see if the balance transfer goes through, it’s important to keep on paying your minimum amounts due on the cards you are transferring balances from. Otherwise, you’ll risk incurring late payment fees and damaging your credit score.
Congratulations – you are on your way to being debt-free. Completing a balance transfer is an easy way to improve your financial life and pay down debt fast.