Is Transferring Credit Card Balances A Good Idea

You get a good promotional offer on a balance transfer credit card.

Is transferring credit card balances a good idea. An introductory 0 interest rate on balance transfers could help you pay down your debt faster by reducing the amount of interest you ll pay on the transferred balance. Let s say you transfer 5 000 and there s a 3 balance transfer fee. Moving a balance from one credit card to another can be a great way to pay off high interest debt especially if the new card has a 0 apr promotion. Even if you have a very large installment loan it s better than owing the debt on a credit card.

The most common incentives are no balance transfer fee and a 0 introductory annual percentage rate apr for a year or so if you make the transfer within a set time after you first get the card. If your goal is to get out of credit card debt within 18 months then transferring a high credit card balance to one with 0 interest is a good idea if you can afford the monthly payments to get the balance to zero before interest rates averaging 19 begin. Balance transfers allow you to take the balances on your existing cards and transfer them to another credit card usually at a lower rate says matt freeman head of credit card products at navy federal credit union. For credit cards that aren t specifically designated as balance transfer cards that fee can range from 2 to 5.

Many credit card companies offer incentives to encourage you to transfer a balance from another card. Balance transfers are a good idea if they ll help you minimize or eliminate interest charges when the balances are transferred to a card with a low apr even better if you don t. Some may vary based on the card or issuer while others are based on your credit or financial situation. Is transferring credit card balances a good idea.

But when it comes to installment loans it s not necessarily a good idea to transfer the balance to a credit card just because you can. A balance transfer could be a good time and money saving idea but there are different factors to consider when comparing balance transfer offers. Many balance transfer credit cards will charge a balance transfer fee of 3 to 5 of the amount you transfer usually with a minimum of 5 to 10. If you pay 250 per month it would take 14 months to pay off the balance and 271.

Most good things aren t free and that includes balance transfers. Depending on the amount of your existing debt that can be a big chunk of change. Installment loans don t hurt your credit much compared to revolving credit card debt. An example of a good balance transfer.