You may want to pay lower interests

You should have listened many times the ups and downs of transferring credit balances from one card to another; but what does it really means? Can you really save money, good money?”Basically, a transfer of credit card balances is the move of outstanding debt from one credit card to another, usually a new one. “Transferring balances provide significant benefits. You will be able to simplify your paymentsfrom paying several accounts to a single one. Also you will definitely save money with lower rates and pay off your credit card debt faster.

 However, it has downsides like transfers fees, interest rates expirations and new purchases withdifferent rates, even your credit score can be affected.In any case, if you have credit card debt and you are paying high-interest fees you should keep reading. This article will help you save money and be debt free sooner than you can expect. What is behind a credit card balance transfer?Sometimes you get caught in higher interests payments that make hard to cut down debts. At that moment, you may want to pay lower interests but how? The answer is to do a debt money transfer from your high-interest rate card to an account with a lower interest payment, so you can save money and pay your debt faster.Time to act: How does a balance transfer work? There are different ways to set up a balance transfer.

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You can answer an offer from a new company, you can ask for a new credit card associated with your checking account, or you can use your current credit cards. What you can’t usually do is to transfer debt between accounts from the same company.You will have to identify the account numbers of the cards you want to get paid and how much do you want to pay on these accounts. Balances can be paid in full or a part of it, what matters is how much money you have been approved.

Your new credit card issuer will contact your old cards and will pay them on your behalf. It could take up to three weeks, so it’s very important for you to continue to make payments in the old accounts.Is my Credit Score at Risk When I Transfer Balances?The quick answer is it won’t affect it if you follow the rules. Factors like credit utilization, on-time payments, and credit line history are important and can even make your score become stronger. To lenders, there are four factors that are the most important when they are calling your credit risk: Rule #1 – Make your payments always on-time, and don’t miss oneYour history of on-time payments indicates how much responsible are you with your obligations. To lenders, your payment history indicates what are you going to do in the future.

 It doesn’t matter if you pay your minimum monthly payment or more than that, but you better make all payments on-time. It shows commitment. Rule #2 – Keep credit utilization below 30%Credit companies look for signs of responsible money usage, and the less you use your credit, the better is for your score. Using less than 30% of your available credit is a good signal. The rate is calculated on all credit cards, not just one. If you have 3 credit cards with $1,000 limit each card and the outstanding balance on one of these cards is $300, your rate is just 10%.

However, if your combining balance is $1,000 your credit utilization would be 30%. To improve your credit utilization, you would need to get a credit card with a higher credit limit that the balance you are going to transfer. Rule #3 – Never apply to more than one credit card at a timeEvery time you apply for a credit card you send an inquiry to your credit score.

Lenders see too many recent inquiries as a sign that you are desperate for credit. At the same time, opening too many new accounts in a short period of time could point to credit problems. Banks see these two behaviors as a risk. In any case, if you have an approval from the bank, it means that they trust you and your credit score may even be increased. However, if your inquiry is rejected, your score can be lowered by 35 points.

Rule #4 – Don’t close your old cardHistory matters in credit and the age of your oldest account indicates to lenders your experience handling credit. A big credit tip is to keep your oldest accounts open and in good standing. It isn’t a quick fix to this rule, but at least you may want to stop worsening it and keeping your old cards open will maintain your credit age high. Understanding and Choosing the Right option for youBalance transfer may seem like a really good option, but it only makes sense if you save money and you improve your credit score as a consequence. Before taking any decision you should compare factors like how much money do you want to transfer, how high will be your new interest  rate, and how much are going to be your transfer fees.

 Where are you Paying More?The best starting point is to identify which credit cards make you pay the more interest andwhere you have bigger balances. Those matches would be the ones you want to cut it down first as those cards are the more expensive ones. In addition, by consolidation several accounts into one you will have less monthly payment and it will be easier to manage.What is balance transfer fee and How to avoid them?Banks have fees, that’s the norma. In the credit balance transfer topic, you will usually pay a fee between 3% to 5% of the amount that will be transferred. If you transfer $10,000, you will end up with a $10,300-$10,500 debt as the fee would be $300-$500.However, if you have a good to excellent credit score, you can save on balance transfer fees, using the credit cards cited below.

Best Balance Transfer Credit Cards with Zero FeesA good to excellent credit score can makes the different for you and make you save even more money with a balance transfer. If your score is good enough you will be able to get one of these zero fee cards: Watch out: 4 Things You Need to Know When Transfer is CompleteIt’s not only about what does balance transfer mean, but also about what are the responsibilitiesyou get when using it.Never use this card for new purchasesOne of the biggest fine print traps for customers is to believe that all new purchases with thenew credit card remain under the same conditions. Wrong!New purchases will usually be rated at the regular interest rate. Another mistake is to take out acash advance, it would go under higher interest rates too. Read the fine print, it is important tounderstand what is your real interest rate.

Don’t miss promo expiration date!Are you joining a deferred or a waived interest? It’s a very important thing to consider whentaking care of your plan. If you have a deferred interest you will get charged for all the interestsjust after the promo rate time. You just kicked the can.On the other hand, if your interest has been waived, you are not going to pay for that interestnever if you pay it during the promotional time, But all residual unpaid debt after the promo timewill be charged with full interest.Don’t miss a payment. Never.

Period!Crystal clear, if you don’t make the minimum payments your promotional rate may be canceledand you will be charged with the regular interest rate. It would be especially hurting if you arecaught with a big balance into higher interest rates.Stay on your debt planLet’s be honest here, if you are thinking about a balance transfer is because you are trying to improve your finances. So you are developing a plan, but if you don’t have a plan, you should make it.

 After deciding what card are you applying for, you should figure out the minimum you are willing to pay. You should define your time windows and what are going to be your credit necessities during this period of time. Also how much money you want to pay every month in the case you want to pay your debt earlier.Is it a good idea to do a balance transfer? Yes, it is. Credit balance transfer is a really good tool as it will make you save money and pay your debt faster. If managed correctly, it will also improve your credit score. So it’s going to be a win-win situation.

 However, the usefulness of this option depends on your spending habits. If you don’t improve your credit behavior you will only kick the can downstreet.Just go for it! 


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