Quick Balance Transfer Guide
Balance transfers allow card holders to transfer the money they owe to their existing credit card to another, usually at a special rate of interest. The new credit card company pays off the old credit card debt and transfers it to the new card.
Balance Transfer Deals
The best balance transfer deals are those that offer up to nine month of interest free credit on any balance transfers. Other cards offer competitive interest rates similar to loan rates instead, sometimes over a longer period.
The Sting
If the card is used for both purchases and balance transfer, any repayments made will go against the cheaper interest option, usually the balance transfer. Purchases made at the more expensive interest rate will be paid off last.
The Smart Solution
Choose a credit card that offers 0% balance transfer and use it ONLY for that balance transfer feature. Do not make purchases on it. This way, any repayment made to that card goes straight against repaying the balance transfer, and only the balance transfer. Make sure the balance is fully paid off before the 0% deal expires to avoid incurring interest charges, or transfer the debt remaining to another card.
Become a Rate Tart
Becoming a rate tart involves shedding any loyalty to any particular card. The art is to secure the lowest interest rate available for balance transfers, and swap to a new card when that rate expires. The old card becomes dormant when the new card takes on the balance transfer of debt. However, the ability to swap cards does depend on the applicant’s credit rating, or score.
No such thing as a standard Credit Rating
Individual companies all use different criteria to assess an applicant’s suitability for credit. So, one company’s refusal may be another’s acceptance. However, making many applications within a short space of time, or holding several dormant credit cards may adversely affect a credit score. Research the best balance transfer deal and apply for that card and that card only to begin with.
Do Balance Transfers help get a new card?
Not necessarily. It all depends on the pattern of spending an applicant has built up, which forms part of their credit score history. Credit card companies assess applicants based on their risk and profitability. A card holder who regularly pays off debt in full will make less profit for the company than a spender who does not, for example.
Better Rates by Staying Put
A lower balance transfer rate might be offered by an existing card account. If the existing balance transfer rate is about to expire, and is due to default to a standard rate, simply ring the credit card company and ask for a rate cut. Rather than lose the account, they may well lower the rate.
Card holders may already have a credit card that offers a low balance transfer rate, and use it currently for purchases, or it is dormant. By transferring the debt from one card to another, and swapping the card used for purchases, users could get better rates without having to apply for any new cards.
The Bouncing Balance
As said before, credit card companies can offer existing customers low balance transfer rates. Say Card A offers a great balance transfer deal, but there is debt already on the card from purchases. The card holder simply clears Card A by transferring all debt to Card B until their Card A statement shows the account is cleared. Then, transfer all the debt from Card B back to Card A, which attracts the special transfer balance rate. However, be aware that the credit card companies do have the right to stop customers transferring money back, but it happens only rarely.
Clear the Decks
Balance transfers can be used to clear debt from cards where special deals have expired, or from expensive store cards. However, always remember that a balance transfer will reduce the credit limit available on a card, and is still a debt that needs repaying. The safest option is to have one card that takes all balance transfers at 0%, and pay off that card within the special 0% deal timeframe.
Current No Fee Balance Transfer Offers
