Credit card debt can accumulate fast, and interest rates can get notoriously high. And, if you don’t pay the debt promptly each month, the debt continues to accrue, and you can find yourself under a mountain of debt. Moving your credit card balance to another card with lower rates can offer the financial reprieve you need for some time.
A credit card balance transfer is a good move, it’s quite straightforward, but it’s not instant.
The entire process may take a few weeks to complete. It’s important to know how balance transfers work, if it’s an option you’re considering.
Here’s how to transfer your credit card balance in six easy steps:
1. Get Your Credit Card Balance And Interest Rate
The first step you ought to take is to gather all the information you can about your current situation. Know your precise credit card balance and the interest rates. These pieces of information are essential to help you pick the most suitable card for the balance transfer. What you want is to find a transfer card that can accept the balance you want to transfer, and which has a lower interest rate than what you’re already paying.
2. Pick A Balance Transfer Card
Fortunately, there are a lot of options for you here, and the application process is quite simple. “Many credit cards will provide instructions online or will provide details through the mail after you are approved.” Says Scott Langdon, analyst at Compare Credit. “When in doubt, call the credit card company that you want to transfer the balance to, and they will be ready to assist.”
However, there are some things you need to consider as they make a difference in how you’ll pay your debt. These include:
- How long the low introductory annual percentage rate (APR) will last. Most balance transfers have an introductory offer of 0% APR for a specified time.
- The time duration you have to transfer your balance after you get the transfer card. This varies from one offer to another.
- The kind of fees you’ll be charged with.
3. Understand The Terms And Conditions
Before you transfer your balance, it’s crucial to understand what you’re getting into, and the terms and conditions attached to it. These include credit card limits that the credit card company determines after assessing your credit score and utilization. You may find that your credit situation may not allow you to be approved for a limit that can cover your existing balance.
Other card issues may have a maximum balance transfer. Also, check any restriction with particular cards. You can come across an issuer who doesn’t accept balances from specific credit card companies.
4. Apply For A Balance Transfer
Once you’ve reviewed the above and have chosen a suitable card, you can move to apply for the transfer. The process typically takes place online. Fill out all the required information, submit, and wait for the approval confirmation. After the approval, you can now transfer the balance.
Decide on the amount you want to move after considering the available credit on the transfer card, the limit for transfer, and the fee, if any.
However, applying for a balance transfer may initially injure your credit score. But, it’ll increase your available credit and lower your utilization, resulting in a positive change in your credit score with time.
5. Initiate The Transfer
After you know how much you can move to your new card, you can go ahead and initiate the transfer. This is also an online process through the website of your new issuer. If you’re unable to do that on the site, calling the credit card company can help. The changes can take up to a week to reflect, but this timeline depends on card issuers.
6. Pay Off Your Debt
When your transfer has been approved and gone through, the balance will reflect on the new card. If it’s possible to transfer your entire credit balance, your debt on the old card or cards will be zero. But, if you’re unable to move everything, keep in mind that you need to continue making the minimum payments on the cards.
It’s crucial to pay off your credit card balances before the introductory low or no-interest period expires. While it’s tempting to close the old cards, it’s better to leave them open without utilizing them for the sake of your credit scores. This is also an excellent time to start thinking about budgeting and your overall spending habits.
Avoid accumulating more debt while you’re still paying the transferred balance to keep you from going through the debt cycle again. One of the best strategies is setting up an automatic payment system that simplifies paying off the debt before the low-interest rate periods lapse.
Bottomline
Moving your credit card balance from one card to another can help you get ahead in paying off your debt. However, you need to review everything carefully to ensure that you’re only committing to paying your debts and not getting deeper into them.