If you are currently in a lot of debt, and are paying an outrageous interest rate on that balance, it is strongly advisable to learn more about how balance transfers work.
High interest on credit card debt is like paying for something over and over – once when you charge it to your credit card, and again each time you get the bill with accumulated interest.
Fortunately, since we are again in an extremely low interest rate environment, there are a few super balance transfer offers floating around.
Take advantage of one of these offers to reduce the amount required to service your current credit card debt every month.
What is a Credit Card Balance Transfer?
A credit card balance transfer allows you to move all, or a portion, of your balance from credit card to another – typically from a credit card with a high interest rate to a credit card with a lower interest rate.
Credit card balance transfers make a lot of sense if you are currently paying a significant interest rate on your balances.
For one thing, consolidating two or three credit card accounts into one can help you manage payments.
Most of us have experienced what happens when we miss a credit card payment – late fees, damaged credit scores, etc.
Balance transfers also help reduce the amount your monthly payment goes towards repaying interest.
By saving money every month on interest payments, you will pay down your principal balance on credit cards much faster.
How to Make a Balance Transfer in Five Steps
1. Verify the balance of the card you’d like to transfer away from.
2. Find a credit card with a super balance transfer offer, or contact one of your current credit card issuers and ask about any balance transfer promotions.
3. Provide the low-interest credit card issuer with the account number and mailing address of the card you’d like to pay off.
4. Continue to make payments on your old card until you receive a statement with a zero balance.
5. Consider cutting up the old credit card with a zero balance. If you don’t, you may be tempted to run the balance back up, effectively doubling the amount you owe.