Balance transfer pros
Balance transfers won't hurt your credit score directly, but applying for a new card could affect your credit in both good and bad ways. As the cornerstone of a debt-reduction plan, a balance transfer can be a very smart move in the long-term.
A balance transfer can be a good way to pay off debt, but it isn't the only way. One is simply to earmark more money each month to paying down your credit card balance. If you have multiple cards, pay at least the minimum due on each one and then put any additional cash toward the card with the highest interest rate.
When You Shouldn't Get A Balance Transfer
When you initiate a balance transfer to a new credit card account, you "move" your balance from one or more cards to the new card. The card issuer will either pay off your other balance directly or cut you a check so you can do so.
No, a balance transfer does not cancel a credit card. You are not required to close the account once a balance transfer is complete, either. It may actually be a good idea to keep your old credit card account open, even if you don't plan on using it.
When you're up to your ears in debt, taking advantage of a balance transfer offer is just like kicking the can down the road. Rather than helping you pay off debt interest-free, it can prolong difficult decisions unnecessarily. In part, that's because balance transfers don't allow you to move huge amounts of debt.
But in general, a balance transfer is the most valuable choice if you need months to pay off high-interest debt and have good enough credit to qualify for a card with a 0% introductory APR on balance transfers. Such a card could save you plenty on interest, giving you an edge when paying off your balances.
If you're looking to pay off one credit balance using another card, this generally isn't possible. Banks don't allow you to pay your credit card balance using another credit card. Typically, payments via check, electronic bank transfer or money order are the only acceptable methods of payment.
Close no more than one credit card every six months, McClary says. "You want to be very careful about how you do it," he says. "Understand that even if you don't close them all at once – you just take them one at a time – it's still going to have a negative impact on your credit score," he says. Updated on Oct.
Paying more than the minimum will reduce your credit utilization ratio—the ratio of your credit card balances to credit limits. ... That's because it isn't the total amount of debt that matters, but the percentage of available credit that you're currently using that really matters.
To prepare, you might want to have at least three cards: two that you carry with you and one that you store in a safe place at home. This way, you should always have at least one card that you can use. Because of possibilities like these, it's a good idea to have at least two or three credit cards.
A balance transfer fee is a fee that's charged when you transfer credit card debt from one card to another. It's usually around 3% to 5% of the total amount you transfer, typically with a minimum fee of a few dollars (often $5 to $10). ... This can be a great tool to pay down debt.
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