“How to Save Money with Balance Transfer Credit Cards”

“`html

Consumer Credit and Finance Education by O1ne Mortgage

At O1ne Mortgage, we prioritize consumer credit and finance education. This post aims to provide an objective view to help you make the best decisions regarding balance transfers. For more information, see our Editorial Policy.

How Do Balance Transfers Work?

A balance transfer involves using a credit card account to pay down another credit card’s balance. For instance, when you transfer a balance between credit cards, you’re asking one credit card issuer to send a payment to one of your credit card accounts. You might receive a balance transfer offer on a new or existing credit card, giving you a low or 0% promotional annual percentage rate (APR) on the balances you transfer to the card. This can lower your monthly payments and save you money overall.

Common Balance Transfer Terms to Know

Understanding key balance transfer terms is crucial if you’re considering using a balance transfer offer:

• Balance transfer fee: Credit cards may charge a balance transfer fee on the amount you transfer to the card. Major card issuers often charge 3% or 5%, but you may find cards from smaller credit unions that don’t have this fee.
• Balance transfer limit: Your account may have a balance transfer limit that’s lower than the card’s overall credit limit. You generally won’t know your limit until after you apply and are approved for the card.
• Balance transfer APR: The balance transfer APR is the promotional APR that applies to the eligible balances you transfer. It’s often a very low interest rate or 0% APR.
• Promotional purchase APR: Some balance transfer cards also offer a promotional APR on purchases. If the card doesn’t have a 0% purchase APR, new purchases might start to accrue interest immediately.
• Initial period: Review the balance transfer offer to see how long you have to request or complete a transfer. For example, you might only receive the balance transfer APR on balances that are transferred to the card within the first 60 days.
• Promotional period: The promotional period is the limited time when your balances receive the promotional balance transfer APR. Depending on the offer, this might last around nine to 21 months.
• Standard APR: Once the promotional period ends, any remaining balances will start to accrue interest based on the card’s standard APR. The rate may depend on your creditworthiness and changes in a benchmark interest rate.

Pros and Cons of Balance Transfer Credit Cards

Before applying for a balance transfer card or using a balance transfer offer, consider the following pros and cons:

Pros

• Accrue less interest: Moving high-interest credit card balances to a card with a low or 0% APR could significantly decrease how much interest accrues each month.
• Consolidate debts: You can transfer balances from multiple accounts to a single card to simplify your finances and free up time.
• Transfer non-credit card balances: Some cards let you transfer balances from loans or transfer a balance to your bank account.

Cons

• Potential fees: Balance transfer fees can increase your total balance at the start and offset some of the potential savings from the lower interest rate.
• Limitations on transfers: You generally can’t transfer balances between cards from the same issuer, and your balance transfer limit might not be high enough to include all the balances you’d like to transfer.
• Doesn’t address overspending: Transferring balances and freeing up your existing credit limits won’t necessarily help if you have credit card debt due to compulsive spending or overspending.
• May require a high credit score: You might need a good credit score to qualify for a balance transfer offer and receive a helpful balance transfer limit.

How to Choose a Balance Transfer Card

Choosing the right balance transfer card depends on how you plan to use the card and the current balance transfer offers. Consider the following:

• The offer’s terms: Review the balance transfer offer’s balance transfer fee, balance transfer APR, and promotional period to calculate your potential savings.
• APR offers on purchases: If you want to consolidate all your balances and spending on one account, look for a card that also has a 0% intro APR on purchases.
• Your long-term plans for the card: If you’d prefer to keep the card open, look for a card that offers cardholder benefits, such as rewards, purchase protections, and insurance.

How to Do a Balance Transfer

Once you find a good balance transfer offer, completing the balance transfers could be a fairly quick and easy process:

• Request a balance transfer when you apply: You might be able to request balance transfers when you apply for the new credit card by listing the other account numbers and the transfer amounts.
• Request a balance transfer to an existing card: You can also wait until your account is open and then request a balance transfer online, over the phone, or via the mobile app.
• Use a convenience check: Some card issuers offer balance transfer checks that you can use to pay down balances or deposit money into your bank.
• Monitor your accounts: Continue monitoring your accounts for at least two billing cycles to make sure you don’t have any remaining balances or residual interest.

Alternatives to Balance Transfer Cards

If a balance transfer card doesn’t seem like a good idea, or you don’t think you’ll get approved for a new card with a high balance transfer limit, consider these alternatives:

• Debt consolidation loan: You could try to get a low-rate installment loan and use the money to pay off credit card balances.
• Debt management plan: Credit counseling organizations may be able to enroll you in a debt management plan (DMP) and negotiate with your credit card issuers to waive fees, bring past-due accounts current, and lower your interest rates.
• Debt payoff strategy: Even if you’re not using any new accounts or outside guidance, you could take a strategic approach to paying off your balances.

Everyone’s financial situation and goals are different, so you’ll have to explore the options and figure out what works best for you.

Contact O1ne Mortgage for Your Mortgage Service Needs

For any mortgage service needs, call us at 213-732-3074. At O1ne Mortgage, we are committed to helping you make the best financial decisions. Reach out to us today!

“`