Balance transfer credit card offers have been a popular means of transferring a balance from one credit card to another. The primary reason that someone would initiate a balance transfer is to obtain a lower interest rate than your current credit card offers.
Balance transfers are relatively easy transactions, and most times the bank will be more than happy to assist you in transferring a balance to their credit card. There are a few things you should know about balance transfers before you begin the process.
What Is a Balance Transfer?
A balance transfer is a simple strategy that many people use in order to obtain the most appealing interest rate. A credit card balance transfer requires that you take the balance on your current credit card and transfer it onto a balance transfer credit card from a competing credit card company.
It is important to note that while many credit card companies offer appealing balance transfer credit cards, you should first ensure that you are eligible to perform a balance transfer and lock in at a low rate before you initiate the procedure.
If you have a low credit score, you may not find a credit card company that will offer you a balance transfer credit card until your credit score increases.
How Balance Transfers Affect Your Credit Score:
Frequent moving of balances from one credit card to another will send up red flags — you will not proceed completely unnoticed. If you are regularly transferring balances from one credit card to another, you run the risk of negatively affecting your credit score.
Credit card companies monitoring your migrant tendencies may decrease your credit line and/or increase the interest rate available to you. Credit card companies grow weary of individuals who have a history of moving balances between credit cards, and therefore, may give you a higher interest rate to ensure they will not lose money by taking you on as a customer.
When Not to Initiate a Balance Transfer:
It can feel like finding a pot of gold when you find a balance transfer credit card that offers a low-interest rate and other incentives to encourage you to make the switch. However, as with any time you engage in a balance transfer, it is essential that you do ample research into exactly what the new credit card provides.
Chances are good that any company that offers balance transfer credit cards is using the tried-and-true credit card balance transfer strategy to get a quick influx of clients. Educate yourself so that you can make an informed decision about your own balance transfer possibilities.
If you have not checked your credit report recently, it might be a good idea to order a copy of your credit report from each of the three major credit bureaus. You may be in better shape than you think, or on the other hand, it could be that there are errors on your report which may be bringing down your score.
Since everyone is entitled to one free credit report annually from each of the bureaus, there is no reason why you should not take advantage of this opportunity to stay on top of your credit.