Pros and Cons of balance transfer


With a balance transfer, you’re taking the balance of one card and transferring it to another card. This is helpful for those that can’t make the full payment until a later time. Basically, you’ll be making your credit card payment by using another credit card. Balance transfers can be helpful, but they can also lead to a lot of negative outcomes. To help you decide if a balance transfer is right for you, we’ve put together this list of 4 pros and 3 cons.

Pro 1: It Can Combine Payments

By doing a balance transfer, you can combine all of your credit card payments into one payment. Once you do this, you’ll be able to focus on one monthly payment and one due date. This is great for those that know they’ll have the money by a certain date each month, but there’s a chance that you could get behind because the payment is higher. If you feel like you’ll have no problem paying the entire amount every month, then a balance transfer could work in your favor.

Pro 2: You Could Save Money on Interest Rates

Another great benefit of transferring your balance is that you could save money on interest rates. This is especially true for those that have raised their credit since they got the credit card that they transferred. If you’re able to find a credit card with a lower interest rate, you’ll be paying off your balance quicker because less of your payment will be going to interest costs. Similar to when you applied for the first credit card, all of this information should be plainly visible before you accept the offer.

Pro 3: You Can Transfer to a Card with Better Terms

You could also start enjoying better terms if you transfer your balance. Some cards have horrible terms that include high fees and shorter grace periods. When looking at credit cards to transfer your balance too, make sure you’re looking at all of this information before applying and accepting the offer. Keep in mind, if you apply and decide to not accept the card, it will still show a pull on your credit report. With that said, try to avoid applying for a card if you’re not completely sure you’re going to accept the offer.

Pro 4: You Might Have a Lower Payment

The final benefit that you could get is a possible lower monthly payment. This is going to depend on the terms, rates, and fees of the new credit card, but there’s a chance that you’ll have lower payments if you can find one with lower rates and fees. You could also get lower payments if the credit card gives you a longer period of time to pay off the balance. Look for this information before accepting a card and make sure that the payment is one that you can easily afford every month.

Con 1: You Might Need to Pay a Transfer Fee

The first con on the list has to do with transfer fees. Some cards won’t require one, while others will. Some will add the fee onto your first payment, while others will require you to pay the amount before they’ll let you activate your account. With this being the case, it’s important to consider the full amount you’ll need to pay in order to complete the transfer. If you can’t find this information, reach out to the creditor before submitting your finalized application.

Con 2: You Could Have More Debt

There’s also a chance that you could put yourself into more debt. Regardless of how many accounts you’re trying to transfer, there’s a chance that the monthly amount is going to be higher than it would be if you just paid the payments separately. You should make sure you look at this information and know exactly how much you’ll be paying every month. Once you know that number, you’ll be able to decide whether or not you can easily afford the new payment every month.

Con 3: You Could End Up with a Higher Interest Rate

The final con of transferring your balance is that you might have to deal with a higher interest rate. The creditor might offer a certain promotional interest rate, but if your income, credit score, or existing debt doesn’t meet the requirements, then you won’t be eligible for the special interest rate. The good thing is that you’ll know what interest rate you’ll be getting before you accept the offer. If you can’t find the information, reach out to the company or try and get approved for a different card.

By considering these pros and cons, you’ll have an easier time deciding whether or not a balance transfer is right for you. If you find that you’ll benefit greatly, then doing a balance transfer every once in a while is a good idea. On the other hand, you don’t want to do it too much because it can put you into a revolving door of debt. Look at all of the information and your personal circumstances to figure out if this service would be beneficial or not.

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