How to transfer your credit card balance

A balance transfer credit card enables you to shift your debt from one card to another to benefit from an introductory 0% interest rate. By moving your debt to one of these cards, you effectively pay off your debt to your old provider, and owe the balance to your new provider, but at 0% interest.

You won’t be charged interest on your transferred balance for a set number of months, so you’re free to make your repayments within this time period without worrying about interest payments stacking up on top of your debt. This time period can range from two months to as long as 34 months, so there’s a range of options available that may suit you, depending on how long it’ll take to wipe out your debt. After all, interest can build up rapidly on credit cards and make paying off your debt stressful, so being able to focus purely on repaying what you originally owe can be a huge relief.

Bear in mind, however, that you will be subject to a credit check before being accepted for a 0% balance transfer credit card deal, and you may be offered a less favourable rate if your financial record isn’t in great shape. If you find that you aren’t accepted for a particular deal because your financial record needs improving, check out our article Seven steps that could improve your credit score for a few ideas to bump up your score.

There are a few ways to check your credit score for free. ClearScore offers a free credit checking service that accesses Equifax data. They also offer free identity protection that scans for stolen passwords, security problems and fraud defence tips. MoneySuperMarket’s Credit Monitor tool enables you to check your score using data from TransUnion and offers free personalised tips to help it grow. You can sign up with Experian and check your credit score with them for free and Totally Money also allows you to check your score free of charge using data from TransUnion.

Bear in mind that even if you are accepted for a 0% balance transfer credit card deal, your new card will still come with a monthly repayment, or the minimum amount that you are expected to pay off each month. If you fail to keep up with these repayments, you might lose your 0% interest deal. You will also need to stick within your credit limit on any new spending.

Also, ensure that you understand what rate you may be charged on your debt once the interest-free period ends. At this stage, you will most likely shift onto your provider’s variable Annual Percentage Rate (APR), which usually averages around 20%. This makes it important to pay off your balance within the interest-free period.

Most (but not all) balance transfer credit cards will involve a transfer fee for moving your debt across. This typically amounts to between 2% and 5% of the balance being transferred. This may sound a lot, but depending on your debt, it may be worth paying for the amount you can save on interest. Still, it doesn’t hurt to do the maths and double-check how much of a saving you’ll make overall.

It’s worth noting that many providers will require that you do not already have a card with them, or have not had one in recent months or years, before you can apply for their balance transfer card. Always check the provider’s criteria carefully before applying.

Author: wpadmin

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