How a Balance Transfer Works. A balance transfer credit card can help you get out from under a mound of debt that comes with a high interest-rate on your current credit card. The primary goal of a balance transfer is to save money on interest charges. However, it could also be the same rate that applies to new purchases, so check your card’s term and conditions. A balance transfer is a transaction where existing credit card debt is moved to another account with a different card issuer. For those paying down high-interest debt, such a … 2  Plus, you’ll receive a cashback match of all the rewards you’ve earned in your account’s first year. Typically, this lower APR lasts for six to 12 months before the standard interest rate kicks in. It can also make sense to transfer a balance to a card without a 0% APR promotional financing offer, so long as it has a significantly lower interest rate, and there’s no balance transfer fee. Procrastinators, It's Not Too Late to Refinance Your Mortgage and Save Thousands, Making Over $65K Per Year? Effectively, a card issuer pays off the balance from another issuer’s account, which then becomes a debt with the issuer’s own account. But once again, note that your payments will first go towards any purchases you made on that account that incur a balance, before being applied to your 0% APR balance transfer. That’s because multiple new requests for credit can be seen as a sign of possible financial distress. Then, you’ll incur charges at the standard rate for balance transfers. You earn 5% cash back on up to $1,500 spent each quarter at select merchants and merchant categories that change each quarter. It’s also a very competitive cash back rewards card. Then you have to wait for the transfer to go through and the credit processed to the account you’re transferring the balance from. A balance transfer is the process of transferring high-interest debt from one or more credit cards to another card with a lower interest rate. What is a Balance Transfer? But if taking advantage of a 0% APR balance transfer offer allows you to postpone repayment of your debt, this can have a negative effect on your credit compared to paying off your debt. Balance transfers aren’t always the best way to get debt relief, however. This card offers new applicants 14 months of 0% APR financing on both new purchases and balance transfers, with a 3% fee for transfers completed within two months of account opening. For instance, if you have a card with a 25% APR, and you can transfer your balance to a card with an 18% APR, you will save a tremendous amount on interest charges, allowing you to pay off your balances sooner. That helps you This usually means you can repay your debt faster and save significantly on interest costs. When using credit cards, one of the concerns you should always have is how your actions will affect your credit history and your credit score. Citi Diamond Preferred. Although balance transfer always includes some transfer fee, which is calculated by the percentage of the total balance, a 0% balancer transfer might be the most convenient and effective way to reduce balance. In the mean time, you’ll still incur interest charges on the account you’re transferring the balance from, and you’ll still need to make any payments that are due on the account. © Provided by Money.com A balance transfer is when you pay off the balances on existing credit cards or loans by transferring them to another credit card account. It can also make sense to transfer a balance to a card without a 0% APR promotional financing offer, so long as it has a significantly lower interest rate, and there’s no balance transfer fee. When you apply for any new credit card, including a balance transfer card, you are making an inquiry into your credit. Offers may be subject to change without notice. Also, most credit card issuers will impose a balance transfer fee of 3% or 5% of the amount transferred, especially on promotional financing offers with 0% APR. Completing a balance transfer is pretty simple; it only takes a few steps to complete. For example, if you have a $5,000 outstanding balance, and you transfer it to a new card that offers 15 months of interest free financing on balance transfers. The other major factor is the card’s balance transfer fee. Microsoft may earn an Affiliate Commission if you purchase something through recommended links in this article. Nearly all cards with 0% APR balance transfer offers will have a fee of either 3% or 5%, but on rare occasions there have been cards with no fees for transfers completed shortly after you open an account. Your choice should be based on three critical issues: Balance transfer fees – expect to pay fees of between 3% and 5% of the outstanding balance. Once you are approved for the new account, you will have an additional loan on your credit history. 7 calle 1, Suite 204 It could save you money and help you simplify your payments — but watch out for fees and other potential drawbacks. A balance transfer is the process of moving existing debt from one credit card to another credit card. In addition to the amount transferred to the new account, the transferring card issuer will often add a balance transfer fee. Balance transfer simply means moving existing debt from one credit card provider to another. What Is a Balance Transfer? A balance transfer is a transaction where existing credit card debt is moved to another account with a different card issuer. Like the Citi Double Cash, the Citi Diamond Preferred card also offers new applicants can receive 18 months of 0% APR promotional financing on both new purchases and balance transfers, with a 3% balance transfer fee. It is most commonly used when describing a credit card balance transfer. Therefore balance transfers not only ease stress, but actually help you a significant sum. This is easy to do when you open a new account that offers 0% APR promotional financing on balance transfers. Many companies featured on Money advertise with us. For example, does it have an annual fee, can you earn rewards and does it offer any kind of bonus for new applicants. Many credit card issuers offer new applicants the chance to transfer a balance and pay 0% APR, or a reduced APR, on the transferred amount for a limited time. If the card has a 0% APR rate, the you won’t incur interest charges on your amount transferred until the promotional rate expires. 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