Use Balance Transfers to Help Pay Down Credit Card Debt
Being bogged down with a significant amount of credit card debt can be difficult. Not only does it put serious strain on your finances, it can also cause stress. There are many ways you can pay down your debt and using a balance transfer card may be one of the best solutions. However, you should know what you’re doing before choosing this option.
Don’t apply for cards with multiple 0 percent introductory periods
Generally, when you apply for a balance transfer credit card, you are offered an introductory period with 0 percent APR. This allows you to have time where your transferred balance won’t accrue any interest. If you see any offers with multiple 0 percent APP periods, it is best to avoid them.
Always pay on time
Just because you were able to transfer your balance from one card to another doesn’t mean you don’t have to pay on time. If you miss a single payment during your introductory period, you could see your insurance rate increase. This mistake could cancel out the benefits of the balance transfer. To ensure you don’t miss any payments, you may want to set up automatic bill pay. It could also be beneficial to pay more than the minimum each month.
Be selective when applying
When looking for a balance transfer credit card, one of the most important features will be the length of the introductory period and the intro rate. While these should be at the forefront, don’t allow them to blind you from the other offerings the credit card has. You should still want a card with no annual fee and certain perks such as cash back and fraud liability protection.
Don’t close your old card
The point of a balance transfer is to get a large balance from a card with a high interest rate to another card with a lower rate. While it may be tempting to close the card with the high rate, you should avoid doing so. This will likely hurt your credit score, as you’ll be shortening your credit history and increasing your credit utilization ratio.