Moving a balance from a credit card with a high interest rate to one with a low interest rate makes financial sense in theory, especially if you can do it with a card that has a promotional 0% annual percentage rate.
If you have strong credit and are disciplined, you can use a balance transfer to pay off debt more quickly and affordably than you might with a credit card with a standard interest rate.
Having said that, there are balance transfer fees, short promotional interest rate periods, and other dangers to think about. Here is all the information you require regarding numerous balance transfers.
You can transfer a credit card balance from one with a high APR to another with a reduced APR by using a balance transfer.
What Is an Account Transfer?
The ideal situation is to transfer your amount to a credit card with an introductory APR of 0%, which will not accrue interest for a predetermined period of time, usually between 12 and 21 months.
However, after the deal expires, the card’s standard APR will apply to you. The average APR for credit cards is currently around 19%, according to Bankrate, a sister site of CNET.
Nevertheless, that is only the average APR; actual interest rates for credit cards may be significantly higher. A high interest rate will make your balance go up and reduce your monthly payments, which will impede your ability to pay off your debt.
The faster you can pay off your debt and the more money you will eventually save, the lower your APR. Balance transfers do have one drawback, though: You almost always have to pay a fee.
The standard fee for a debt transfer from a credit card company is between 3% and 5%, with a $5 or $10 minimum. Nevertheless, if you’re transferring a balance to a card with a 0% APR, the 3% balance transfer charge can be less than the monthly interest you’d pay on a card with a high APR.
There are credit cards without balance transfer fees, but their promotional APR periods are often much shorter, so you’ll need to examine the advantages and disadvantages of your particular circumstance.