5 Questions Before Applying for a Balance Transfer Credit Card

April 19, 2019

By Sherry Keyles

You’ve heard all about the benefits of balance transfer credit cards with introductory 0% APR offers and you’re confident it’s the best option to help you pay down your high-interest credit card debt. Now, you’ve gathered some offers and ready to select your card.

When reviewing balance transfer credit card offers, you need to ensure you are getting the best card to meet your financial goals. The last thing you want is to transfer your balances to a new card only to find out it’s costing more money rather than saving you some. So take out the financial plan you’ve set for yourself and start shopping for a balance transfer credit card.

To ensure you don’t make any mistakes in choosing a card, here are five questions you should ask when comparing credit card offers.

How long is the 0% APR offer?

The 0% APR promotional offer is the key factor for obtaining a balance transfer card so it’s important to know from the outset how long the promotional period lasts.

Current introductory offers range from 12 to 21 months. When the offer ends, you will be charged the regular interest rate, which is generally a variable APR of 16.24% - 26.24%, depending on your creditworthiness. To get the most value from a balance transfer card, you will want to pay off your debt within the no-interest period. It’s important to know how much time you need to realistically pay off your entire debt.

Can I transfer my entire debt to the new card?

Make sure the balance transfer credit card you choose has a credit limit high enough for the entire amount of the debt from your existing credit card.  Your credit limit is based on the lender’s evaluation of your credit score and credit history. In some cases, you may not be approved for a limit covering the entire balance you want to transfer or your balance may be over the issuer’s maximum balance amount.

While you can transfer only a portion of your balance, you will have to make monthly payments on two cards until you can pay off the balance on your old card. Depending on the amount owed, you might be better off not doing a balance transfer. It’s also a good idea to select a card with an affordable minimum monthly payment. If you miss payments, you’ll face late fees and a lower credit score.

Does the card charge balance transfer fee? If so, what is the fee?

Most balance transfer cards charge a fee on the balance amount transferred – usually 3% to 5%. It’s important to determine the cost of the balance transfer including the fee. Otherwise, you could end up paying more than you are on your current card.  For example, if you were to move a balance of $5,000 to a card with a 3% balance transfer fee, $150 would be added to your balance. While with a smaller balance, a fee might not make much of a difference. However, if you have a large balance, it can have a big impact.

Some issuers do offer cards with no balance transfer fees so you may want to seek out those offers if a balance transfer fee is an issue. Make sure you know the terms and conditions you must meet to have the balance transfer fee waived.

How long do I have to transfer your existing balance?

In order to take advantage of the no-interest promotional offer, most cards require the balance to be transferred to the new card within a certain period of time. Typically, you have 60 days from account opening to transfer the balance. If you don’t transfer within the required timeframe, you will forfeit the 0% APR offer and be stuck paying a higher interest rate.

Transfer the balance as soon as possible to maximize the 0% APR offer and avoid the high-interest you are accruing on your old card.  In addition, transferring early will ensure you don’t miss the deadline.

Are there any other restrictions I should know about?

All balance transfer cards have terms and conditions you must follow in order to receive the no-interest introductory offer. The terms and conditions outline any additional fees (foreign exchange, late fees, etc.) as well as the consequences of not meeting the rules.  For example, your card may cancel the introductory offer and apply the purchase APR to the remaining balance

Another restriction you need to know about is what cards you can transfer a balance to or from. Generally, issuers do not let you transfer a balance from an account with the same bank. If you have a Citi credit card currently, you cannot transfer the debt to another Citi card. You will choose a card from another issuer such as Chase or American Express. Balance transfer credit cards are a great way to paying off your credit card debt faster while avoiding high-interest payments. However, each card has different risks and benefits. If you ask some questions before you apply, you will ensure you find the right card.

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