Here’s What You Should Know About Balance Transfers

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Have you seen an add for a 0% Annual Percentage Rate on a new credit card and are now thinking of doing a balance transfer?

A balance transfer can help if you are looking to pay down debt and ultimately save you money. 

Related: How to Stay Organized with your Finances

Here are a few Pros and Cons to help you with your decision, according to MyFico.

Pros

• Great introductory interest free rate normally at 0% APR for a set number of months, this could save you money in interest fees, which you could use to clear the debt faster.
• Most credit cards are unsecured, which means you don’t have to put your property at risk when taking one out.
• You can combine smaller credit card balances into one card, meaning you would save on multiple credit card fees from different issuers.

Related: What You Should Know About Secured Credit Cards

Cons

• You might not be accepted or find it more difficult to get a balance transfer if you have a limited, low, or damaged credit history.
• Many lenders will charge a fee to transfer an existing balance, these could be in the ranges of 3% – 5% typically for every $1000 you transfer.
• You are not guaranteed to get the level of credit you are looking for, as the limit won’t be determined until you have been accepted for a line of credit, this could be less that the amount you are wanting to transfer on to the new card.

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