You've probably heard of balance transfer credit cards. But you may not be aware of all the benefits that come with them. These cards can help you get out of debt while enjoying additional perks. If you're thinking about signing up for a new card, here are three reasons to consider a balance transfer.
A Chance to Consolidate Debt
If you have a number of outstanding balances on different credit cards that are weighing you down, you're not alone. Many cardholders juggle various accounts and interest rates. When you want to get rid of the balances, it can be hard to keep track of everything.
A balance transfer card is a smart option to get you organized. You can consolidate your credit card debt into one account. Balance transfer credit cards usually offer lower interest rates than other cards. This allows you to save on interest as you pay off the amount. By setting up a schedule to make payments, you can get out of debt quickly.
0% APR Introductory Period
In addition to a lower regular interest rate, balance transfer credit cards usually include an introductory period. This may apply to the balance transfer itself. That means that the amount you bring over will not be charged interest for a certain time, usually between six and twelve months. This creates a window for you to reduce the debt, interest-free. If possible, you'll want to pay off the entire amount during this time. Through this method, you could save hundreds of dollars in interest fees.
Some balance transfer credit cards include a 0% APR introductory period for purchases as well. This allows you to buy items and avoid high interest fees. The 0% interest on purchases is a convenient feature if you've already paid off the existing balance. If not, you'll want to concentrate on reducing the amount you owe before using the card on a regular basis.
Additional Rewards
Balance transfer credit cards are often advertised as a way to consolidate and reduce debt. And in a large part, they are. But many also include additional benefits, such as rewards programs. Once you start making purchases with the card, you can earn rack up points for free airline tickets, travel benefits, and cash back bonuses.
As you shop, compare the different features of balance transfer credit cards. Consider the various interest rates offered, as well as the attached rewards programs. Some credit card websites include a balance transfer calculator, which lets you see how much you would be saving by switching cards. Punch in the different rates and balances, and use it as a guide to find the right option for you.
You'll also want to read the fine print before applying. Some cards charge a fee for bringing over outstanding amounts from other places. Check to make sure you will save more on interest than you have to pay in transfer fees. For most cards, the savings do outweigh the costs involved.
After signing up for a new card, it's up to you to make the most of it. Make monthly payments to get rid of any outstanding balances as quickly as possible. Then start using the card for new purchases. With proper planning, you'll be out of debt and in the rewards in no time. How's that for a good credit card deal?
