If this is a familiar feeling, you\u2019ll probably want balance transfers explained to you. What is a balance transfer anyway, and what is the point? Getting a balance transfer card can help you pay off your debts without racking up any more interest.<\/p>\n\n\n\n
Your balance is the amount of money you owe to your credit card company. If you have several cards, you\u2019ll have several balances.<\/p>\n\n\n\n
If you transfer your balances from your existing credit cards onto a new, balance transfer card, then you have made a balance transfer.<\/p>\n\n\n\n
If you haven\u2019t been able to pay off your credit card bill in full every month, you\u2019ll probably be paying a lot in interest.<\/p>\n\n\n\n
Balance transfer cards offer introductory periods of 0% interest or very low interest. Say your normal credit card has an interest rate of 18%. When you transfer your money from your credit card onto a balance transfer card, the interest rate can go from 18% to 0%. This gives you time to pay off your debt, without racking up more debt from interest.<\/p>\n\n\n\n
If possible, spending on a balance transfer card should be avoided \u2013 using it to pay for things will increase your debt, defeating the reason you got the card in the first place!<\/p>\n\n\n\n
Seems too good to be true, right? The catch is the introductory fee. This is usually calculated as a small percentage (0.5 \u2013 3%) of the balance you are going to transfer.<\/p>\n\n\n\n
In some cases, this fee can wipe out the benefits of the interest-free period.<\/p>\n\n\n\n
If you\u2019ve been rejected for any kind of credit recently, then you should wait until three months since your failed application has passed before applying for a balance transfer card. This is because you are unlikely to be accepted if you have recent rejections on your credit report.<\/p>\n\n\n\n
If this doesn\u2019t apply to you, then a balance transfer might be for you!<\/p>\n\n\n\n
In making your decision, you should weigh up these three things:<\/p>\n\n\n\n
After the introductory period, balance transfer cards might charge higher interest rates than your current credit card. If you can\u2019t clear your debt before the introductory period, you will have paid the transfer fee plus be paying higher interest rates than you would anyway.<\/p>\n\n\n\n
It\u2019s important that you are able to pay off your debt before the introductory 0% or low-interest period ends.<\/p>\n\n\n\n
Let\u2019s simplify a typical scenario with some rough figures. Say you have a total debt of \u00a35,000 across all your existing credit cards. You\u2019ve found a balance transfer card that offers 0% interest for 24 months, and a transfer fee of 1.4%.<\/p>\n\n\n\n
1.4% of \u00a35,000 = \u00a370 (transfer fee)
\u00a35,000 \/ 24 = \u00a3208.33 (the amount you have to pay every month to clear your debt before the end of the 0% interest period)<\/p>\n\n\n\n
Ask yourself: \u201cCan I afford to pay \u00a370 upfront as well as commit to paying \u00a3208.33 a month, for 2 years?\u201d<\/p>\n\n\n\n
If the answer to this question is yes, then this particular balance transfer card is for you.<\/p>\n\n\n\n
If you have, say, \u00a35,000 of total debt but your balance transfer card only allows a transfer of \u00a33,000, you should transfer your highest rate debt first. This will shrink the amount of interest you pay (though not reduce it to zero).<\/p>\n\n\n\n
Balance transferring some of your debt in this way will also increase your creditworthiness.<\/p>\n\n\n\n
This is because:<\/p>\n\n\n\n
Q: What is the maximum I can balance transfer?<\/strong> Q: When can I not make a balance transfer?<\/strong> Q: How long does a balance transfer take?<\/strong> Q: If I’m transferring a balance from a credit card, should I then close it?<\/strong> All of these things help to increase your creditworthiness, so it’s worth considering what you do with your paid off credit card.<\/p>\n\n\n\n If you have a poor credit history, you\u2019re unlikely to qualify for a balance transfer card.<\/p>\n\n\n\n And if you do qualify, you will probably be offered a worse deal than advertised. For example, you might be offered only 6 months at 0% interest, rather than 18 months. This means that a balance transfer card is often only worth getting if you have good creditworthiness.<\/p>\n\n\n\n Your Credit-Score account will help you out here- showing only products that you are eligible to apply for, and showing you your chances of approval. If you do have a poor credit history, you’ll be able to see personalised and actionable insights on your credit report and be able to boost it prior to applying.<\/p>\n\n\n\n Sign up<\/a><\/p>\n\n\n\n So how do you find out what deals you qualify for?<\/p>\n\n\n\n Not by applying to them all. Applying for a balance transfer requires a hard search<\/a>. This leaves an imprint on your credit report, which is visible to all potential lenders who perform a credit search. And being rejected for a balance transfer card will lower your creditworthiness for approximately three months. This means you damage your chances of being accepted for any form of credit for several months in the future.<\/p>\n\n\n\n So, you should be thinking you\u2019ve only got one shot at applying for a balance transfer card, so you\u2019ll want to make sure you score.<\/p>\n\n\n\n
A: Usually 90-95% of your new available credit limit which leaves sufficient room for any balance transfer fee.<\/p>\n\n\n\n
A: Between credit cards issued by the same banking group.<\/p>\n\n\n\n
A: Approximately 7-10 days.<\/p>\n\n\n\n
A: This depends. To reduce your chance of spending on it again and getting into more debt, you’d want to do so. However, keeping it and using it every so often would continue to contribute to your creditworthiness. Even sat in a drawer doing nothing it’s: <\/p>\n\n\n\nDo I qualify for a balance transfer card?<\/strong><\/h4>\n\n\n\n
Which balance transfer card is for you?<\/strong><\/h4>\n\n\n\n