Credit card debt remains a serious financial problem for many Americans, but balance transfer credit cards are one way consumers can actively start paying off and repairing their credit card debt by consolidating all of their debt onto a single card.
Depending on overall credit score and history, many consumers can benefit not just from paying off their extenuating debts, but doing so by taking advantage of 0% APR introductory offers. This provides the opportunity to save money on interest rates, and to simplify monthly payments on one card versus a variety of cards.
Beating credit card debt is a benefit unto itself, but going the route of balance transfer credit cards comes with its own special pluses:
Consolidation. All else aside, choosing a balance transfer credit card is an easy easy way to manage debt. Instead of trying to juggle debt on several different cards, with a balance transfer card, debt is collected together into one card, allowing consumers to concentrate their debt in one place.
0% balance transfer. Many balance transfer credit cards come with a 0% introductory APR — for a short period of time, a card holder owes no interest at all as they pay down their consolidated balance. Debt is paid off quicker, with no worry of added interest.
Credit strengthening. It’s not just about ridding one’s self of credit card debt. A balance transfer card also helps consumers rebuild their credit, too, not to mention solidify their relationships with their financial providers for future dealings.
With many balance transfer offers, there are things to look for that may require some compromise, such as fees. While capped, many transfer fees are about 3 percent of total funds transferred.
Interest rates can also be high once introductory offers have expired. A balance transfer card may carry a nominal or 0% interest rate at first, but like traditional credit cards, standard interest rates thereafter can run into double digit percentage points if you don’t pay back your balance during the promotional phase.
Another thing consumers should keep in mind is that interest doesn’t stop at paying down their debt — new purchases are also charged interest, too. Keep track of your finances with one of many balance transfer calculators on the web.
Perhaps the most important thing about zero-balance transfer credit cards are the myriad of choices. From Visa to PenFed, American Express to Barclays, each balance transfer card offer has something different to choose from to reduce debt and remain debt-free.