Balance Transfer Credit Cards

What is a Balance Transfer Credit Card?

Many credit card companies are now offering balance transfer credit cards. This simply means moving debt from one credit card to another, usually with a lower or 0% interest rate for an introductory period. It can also be used to consolidate debts by transferring the balance of several different cards to one with a lower interest rate.

Some credit card companies charge a balance transfer fee which is something to be aware of when looking for a balance transfer credit card.

Basically, when you have looked around for the credit card that is right for you, apply for the card and if you are accepted you need to give the new card issuer details of your old card.

Most credit card companies have a time limit on when you need to transfer the debt. Sometimes it is immediately and in other cases it is up to 30 - 90 days. A lot of issuers now have online banking so it is possible to do the balance transfer yourself. It is also possible to transfer debt from store cards.

There can be lots of clauses with balance transfer credit cards so look carefully at the small print. One of the main examples is the interest rate for purchases on a balance transfer card. In a lot of cases, any purchases made on that card will be charged at the standard rate. Any repayments that you make go towards your balance transfer first so you will be paying interest on purchases until the balance transfer is paid off in full.

When the introductory period is up, the interest rate will revert to the standard rate. Before this happens you can apply for another 0% balance transfer credit card and keep doing this until the debt is gone. A good idea though is to do it before the end of the introductory period as it can take time for paperwork, transfers and new cards to be issued.

This is a good way of reducing credit and store card debt if handled correctly without having to pay lots of interest.