4 Things To Think About Before Doing a Balance Transfer
Ideally, the best way to use a credit card is to pay your balance each month. But we don’t live in an ideal world. For many who rack up debt on a high-interest card, the best option may seem to be a balance transfer to a lower interest rate card. But is that a good idea? We’ll talk about it in this article.
What Is A Balance Transfer?
Simply put, a balance transfer is moving outstanding balances from one credit card to a separate card that has a lower interest rate. By doing this, you are essentially moving the debt on the more expensive card to the new card. Many credit card issuers make the balance transfer attractive by offering the transfer free to consumers.
Things To Consider Before Making a Balance Transfer
Like most things in life, there’s much to consider before committing to a balance transfer.
- Transferring doesn’t actually equal paying. Even though the company from credit card “A” will consider your debt to them to be satisfied, the debt still has to be paid by you. The only thing that’s changed is that you owe the debt to credit card company “B.”
- While some companies say the balance transfer is free, remember that few things in life are actually free. If you’ve been wooed by a low-interest rate or no interest rate at all, those teaser rates won’t last forever. After a set period of time – usually about six months or a year – the interest rate will typically begin to edge up again.
- Balance transfers aren’t just for credit cards. You can also move loans for automobiles, appliances and other monthly payments to balance transfer cards.
- Repeat transfers aren’t good for you. If you think that transferring the balance to yet another card when the teaser rates expire is a good idea, think again. Making such moves while still maintaining high debt levels can do a lot of damage to your credit score.
Tired of Living With Crippling Debt? Call The Oswalt Law Firm
There is a host of options available that can help you get out from under debt – no matter how much you owe. To learn more, call us here at The Oswalt Law Firm. The first consultation is always free, so call us at 602-225-2222.