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Best Way to Walk the Balance Transfer Tightrope

Balance transfer credit cards have a lot of moving parts, including a balance transfer APR, balance transfer fee, annual fee and, potentially, introductory rates and fees. Plus, offers change regularly. And choosing the best balance transfer credit card for your needs is only half the battle. You also need to get approved for a high enough credit limit and pay off your balance before high-interest rates start costing, rather than saving, your money.
To help you navigate the process successfully, we posed the following questions to a panel of experts on paying down debt.

What’s the best way to find the best balance transfer credit card?

People with good credit often get invitations and offers from their own bank, credit union or credit cards, inviting them to transfer balances. It is always good to check offers on the Internet. Although, be very careful about entering private information (Social Security number, etc.) into forms from advertisements that have been received in your email. If an ad looks good, do not follow a link in the ad. Find the bank’s website to ensure private information goes to a reputable vendor.

Why do you need good or excellent credit to get the best balance transfer credit cards?

High credit scores translate to lower interest rates. Do not take high-interest loans to restore credit scores. That can bring your score down. Credit management will impact scores. If you have limited credit (perhaps only one credit card), consider opening another account and try to pay balances in full each month to establish a good payment history.

What’s the biggest mistake people make with balance transfers?

A major pitfall is to reduce monthly minimum payments on transferred balances and getting stuck at the end of the introductory period with a balance, plus the accrued interest from the beginning of the transfer. Many credit cards allow 0% interest for an introductory period. However, if the balance is not paid in full during that period, they assess interest back to the beginning of the introductory period. The purpose of transferring a balance is to reduce the interest cost to help repay the debt. Avoid using transfers to get additional debt. Take advantage of the low interest to get debt paid off.

Why aren’t there more 0% balance transfer credit cards with $0 transfer fees?

Banks offer transfers to make money. They offer good deals to attract good, creditworthy customers.

 

Go to the full article on Wallethub.com

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