How Do Balance Transfer Credit Cards Work
Transfer High Rate Balances Using Balance Transfer Offers:
Balance transfer credit card offers have been a popular means of transferring a balance from one credit card to another. The primary reason to initiate a balance transfer is to obtain a lower interest rate than your current credit card offers.
Transferring a balance is a relatively easy transaction. 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 before you begin the process.
What Is a Balance Transfer?
Transferring balances between credit cards is a simple strategy that many people use. After all, why would anyone want to pay more interest than necessary? This process requires that you transfer the balance on your current credit card onto a credit card from a competing credit card issuer.
It is important to note that while many credit card issuers offer appealing balance transfer credit cards, you should first ensure that you are eligible to perform a transfer. If you have a low credit score, you may not qualify for this type of credit card. You may have to wait until you are able to increase your credit score.
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. Regularly transferring balances from one credit card to another has the potential to negatively affect 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. Therefore, they may charge you a higher interest rate to ensure they will not lose money in 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, it is essential that you do ample research into exactly what the new credit card will provide you.
Chances are good that any company that offering this type of credit cards is using the tried-and-true credit card balance transfer strategy to get a quick influx of clients. Educate yourself so you can make an informed decision about your own possibilities of obtaining a balance transfer credit card.
If you have not checked your credit report recently, this might be a good time to do that. Everyone is entitled to one free credit report annually from each of the 3 credit bureaus. There is no reason you should not take advantage of this opportunity to stay on top of your credit.
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.
