How to Save Money with Balance Transfer Credit Cards

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Understanding Balance Transfer Credit Cards

At O1ne Mortgage, we prioritize consumer credit and finance education. This post aims to provide an objective view to help you make the best decisions regarding balance transfer credit cards. For any mortgage service needs, call us at 213-732-3074.

Key Balance Transfer Terms to Know

A balance transfer credit card can be a useful tool for paying down debt while saving on interest charges. However, understanding how balance transfers work before applying for a new card is crucial. Here are seven essential balance transfer terms to know:

1. Annual Percentage Rate (APR)

Credit cards may have multiple APRs, determining the interest on different balances. A balance transfer offer typically provides a lower APR on transferred balances. If the offer includes a 0% introductory APR, transferred balances won’t accrue interest during the promotional period, allowing you to pay down the balance faster.

2. Promotional or Introductory Period

Balance transfer offers provide a lower APR for a limited introductory period, which can last up to 21 months. After this period, any remaining balance will accrue interest based on the card’s standard APR.

3. Variable APR

Most credit cards have variable standard APRs, which can change based on a benchmark rate. These changes can affect the interest accrued and your minimum payment amount.

4. Balance Transfer Check

Some credit cards come with balance transfer checks to send payments to other credit card issuers or lenders. Ensure the check is not a convenience check, which results in a cash advance rather than a balance transfer. Alternatively, request a balance transfer online or by calling your card issuer.

5. Balance Transfer Fee

Most credit cards charge a fee for each balance transfer, typically 3% or 5% of the amount transferred. Some cards may have higher or lower fees during an initial period, while others, particularly from smaller credit unions and banks, may not charge a balance transfer fee.

6. Annual Fee

Some credit cards charge an annual fee, which may be due when you first open the card and on each cardholder anniversary. If you’re opening a card to transfer and pay down balances, consider options without annual fees to put more money toward paying off the debt.

7. Balance Transfer Limit

Your credit card’s credit limit determines the maximum balance before transactions get declined. However, the balance transfer limit may be lower than the credit limit. Some credit card companies also limit how much you can transfer within a certain period.

Compare Balance Transfer Offers

Many credit cards offer balance transfer options with varying promotional APRs, introductory periods, and fees. A 0% APR offer with a long introductory period and low fees may be ideal. Your credit score will affect your eligibility and balance transfer limit, and you generally can’t transfer balances between credit cards from the same issuer. Comparing options can help you identify the best card for your needs.

For any mortgage service needs, call O1ne Mortgage at 213-732-3074. We’re here to help you make informed financial decisions.

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