A balance transfer is when you move money you owe from one credit card to another that charges less in interest. See related: Best balance transfer cards Balance transfer is a type of personal loan that banks in Singapore offer to help you refinance your credit card debt at lower interest rates. For example, does it have an annual fee, can you earn rewards and does it offer any kind of bonus for new applicants. Offers may be subject to change without notice. A balance transfer is a transaction where existing credit card debt is moved to another account with a different card issuer. When you apply for any new credit card, including a balance transfer card, you are making an inquiry into your credit. Not only will you avoid paying a lot of money in interest charges, all of your monthly payments will go towards the principal, allowing you to pay off your balance sooner. 7 calle 1, Suite 204 Unlike the Double Cash, it’s not a rewards card, but it does have no annual fee. It’s also a very competitive cash back rewards card. Effectively, a card issuer pays off the balance from another issuer’s account, which then becomes a debt with the issuer’s own account. A credit repair company could improve your chances of getting approved. For instance, if you have a card with a 25% APR, and you can transfer your balance to a card with an 18% APR, you will save a tremendous amount on interest charges, allowing you to pay off your balances sooner. Apart from a low interest rate, certain balance transfer … Start NowADVERTISEMENT. If the card has a 0% APR rate, the you won’t incur interest charges on your amount transferred until the promotional rate expires. Opinions are our own, but compensation and in-depth research determine where and how companies may appear. Since the amount of the fee is added on to your new balance, a lower fee is much better than a higher one. Balance transfers aren’t always the best way to get debt relief, however. That’s because these credit cards usually come with a 0% interest offer for a limited time. Moving outstanding debt on one credit card to another card—usually a new one—is a balance transfer. For example, does it have an annual fee, can you earn rewards and does it offer any kind of bonus for new applicants. For more information, read. This type of transfer is great for people who have a high-interest debt to pay down, as it brings money-saving benefits. Completing a balance transfer is pretty simple; it only takes a few steps to complete. The primary goal of a balance transfer is to save money on interest charges. What Is a Balance Transfer? Effectively, a card issuer pays off the balance from another issuer’s account, which then becomes a debt with the issuer’s own account. The Citi Double Cash card also offers up to 2% cash back on all purchases, with no limits. Once the new balance appears on the account you transferred it to, it will be subject to the account’s interest rate for balance transfers. Now, let’s look at what is balance transfer from the point of selecting the best balance transfer card. © Copyright 2020 Ad Practitioners, LLC. One inquiry by itself will have little effect, but if you have several inquiries in a short time period, then it can have a significant, but temporary effect on your credit score. The new bank/card issuer makes this arrangement attractive to consumers by offering incentives. For those paying down high-interest debt, such a … New applicants can receive 18 months of 0% APR promotional financing on both new purchases and balance transfers, with a 3% balance transfer fee. The longer the offer extends, the more valuable it is. This card offers new applicants 14 months of 0% APR financing on both new purchases and balance transfers, with a 3% fee for transfers completed within two months of account opening. However, it could also be the same rate that applies to new purchases, so check your card’s term and conditions. A balance transfer intro APR is a period of time — often between 12 and 21 months — where you pay 0% interest on balances you transfer to a credit card.. Not all credit cards come with this feature, but those that do can be extremely useful during times of financial crisis. How a Balance Transfer Works. A balance transfer allows you to move your existing credit card debt to a new credit card with a lower or 0% rate of interest. When you make on-time payments, this will add positive information to your credit history and can help your credit score. GET STARTEDADVERTISEMENT. So, what is a balance transfer? Citi Diamond Preferred. That’s because multiple new requests for credit can be seen as a sign of possible financial distress. Like us on Facebook to see similar stories, DC on lockdown and on edge before Biden's inauguration. But once again, note that your payments will first go towards any purchases you made on that account that incur a balance, before being applied to your 0% APR balance transfer. Although balance transfer always includes some transfer fee, which is calculated by the percentage of the total balance, a 0% balancer transfer might be the most convenient and effective way to reduce balance. Find out what credit repair can offer you. This could be 0% APR or a lower, promotional interest rate. Also, keep in mind that any payment you make above your minimum payment will first be applied to the balance with the highest interest rate, which won’t be a 0% APR balance transfer. This process doesn’t remove your debt. You should carefully consider the benefits and downsides to balance transfers before initiating the process. When you make on-time payments, this will add positive information to your credit history and can help your credit score. Ad Practitioners, LLC The amounts owed makes up 30% of your FICO score and is the second most important factor after your payment record. Guaynabo PR 00968. Credit Repair companies can help you repair and improve your credit so you can apply for the credit card of your choice. In some situations, this is the smartest step for the person as it ensures zero interest and better benefits. A balance transfer is the process of moving existing debt from one credit card to another credit card. What is a balance transfer? Generally, a balance transfer occurs when you move debt from an existing account to a new account to take advantage of a lower interest rate. Microsoft may earn an Affiliate Commission if you purchase something through recommended links in this article. It can also make sense to transfer a balance to a card without a 0% APR promotional financing offer, so long as it has a significantly lower interest rate, and there’s no balance transfer fee. Not only will you avoid paying a lot of money in interest charges, all of your monthly payments will go towards the principal, allowing you to pay off your balance sooner. A balance transfer moves debt from one account to another, for example from a high-interest credit card or loan to a new credit card with a low or 0% introductory annual percentage rate (APR). You also earn unlimited 1% cash back on all other purchases. Many credit card issuers offer new applicants the chance to transfer a balance and pay 0% APR, or a reduced APR, on the transferred amount for a limited time. The official balance transfer definition is moving debt from one credit card to another. Balance transfers are a good way of paying off debt if you choose a low interest rate with enough time to pay it, however many people fall into the trap of continually transferring their debts to different cards, incurring unnecessary fees and affecting their credit rating. When using credit cards, one of the concerns you should always have is how your actions will affect your credit history and your credit score. The primary goal of a balance transfer is to save money on interest charges. A balance transfer is a type of credit card transaction in which debt is moved from one account to another. Also, keep in mind that any payment you make above your minimum payment will first be applied to the balance with the highest interest rate, which won’t be a 0% APR balance transfer. That’s because multiple new requests for credit can be seen as a sign of possible financial distress. A balance transfer is the transfer of the balance in an account to another account, often held at another institution. In addition to the amount transferred to the new account, the transferring card issuer will often add a balance transfer fee. Ads by Money. For example, if you have a $5,000 outstanding balance, and you transfer it to a new card that offers 15 months of interest free financing on balance transfers. For instance, if you have a card with a 25% APR, and you can transfer your balance to a card with an 18% APR, you will save a tremendous amount on interest charges, allowing you to pay off your balances sooner. A balance transfer is a transaction where existing credit card debt is moved to another account with a different card issuer. In addition to the amount transferred to the new account, the transferring card issuer will often add a balance transfer fee. There are many credit cards that offer 0% APR introductory financing for balance transfers. Plus, there’s no annual fee for this card. The other major factor is the card’s balance transfer fee. But once again, note that your payments will first go towards any purchases you made on that account that incur a balance, before being applied to your 0% APR balance transfer. So even if your balance isn’t incurring interest, paying it down or paying it off altogether will help to raise your credit score. Unlike the Double Cash, it’s not a rewards card, but it does have no annual fee. It is most commonly used when describing a credit card balance transfer. Opinions expressed in this article are the author's alone, not those of a third-party entity, and have not been reviewed, approved, or otherwise endorsed. The credit card industry is incredibly competitive, and card issuers will go to great lengths to acquire new customers. What Is a Balance Transfer? Like the Citi Double Cash, the Citi Diamond Preferred card also offers new applicants can receive 18 months of 0% APR promotional financing on both new purchases and balance transfers, with a 3% balance transfer fee. This is easy to do when you open a new account that offers 0% APR promotional financing on balance transfers. Try and identify the card with the lowest fees. Just note that you cannot transfer a balance between two accounts held by the same card issuer. Transferring a balance, by itself, won’t have any direct impact on your credit. Some credit card issuers offer special promotional interest rates on balance transfer to entice new customers. For more information, read Money’s full disclaimer. Here’s why: Suppose a financial crunch lasts for months. What Is a Balance Transfer? A balance transfer to a card with a much lower interest rate, ideally 0% APR for a year or more, means that your payment will be going mainly or totally toward paying off … The card issuer will need to know the name of the of the issuer of the card you want to transfer the balance from, its account number and the amount you wish to transfer. Citi Diamond Preferred. You earn 1% cash back at the time of purchase, and another 1% cash back when you pay for your purchases, for a total of up to 2% cash back. There’s no annual fee for this card, no penalty interest rate and your first late payment fee is automatically waived. This article originally appeared on Money.com and may contain affiliate links for which Money receives compensation. Plus, you’ll receive a cashback match of all the rewards you’ve earned in your account’s first year. A balance transfer is when you pay off the balances on existing credit cards or loans by transferring them to another credit card account. Plus, there’s no annual fee for this card. The best balance transfer credit card with rewards is the Discover it Balance Transfer card, because it offers 0% APR for at least 15 months on balance transfers paired with a 3% balance transfer fee, and it offers above-average cash back rewards that won't lose value. Once the new balance appears on the account you transferred it to, it will be subject to the account’s interest rate for balance transfers. But the most competitive offers will last 12-18 months, and occasionally even longer. The card issuer will need to know the name of the of the issuer of the card you want to transfer the balance from, its account number and the amount you wish to transfer. Then, you’ll incur charges at the standard rate for balance transfers. Typically, this lower APR lasts for six to 12 months before the standard interest rate kicks in. Plus, you’ll receive a cashback match of all the rewards you’ve earned in your account’s first year. How to choose the best balance transfer card. Effectively, a card issuer pays off the balance from another issuer’s account, which then becomes a debt with the issuer’s own account. The amounts owed makes up 30% of your FICO score and is the second most important factor after your payment record. So even if your balance isn’t incurring interest, paying it down or paying it off altogether will help to raise your credit score. How To: Remove Items From Your Credit Report, How To: Boost Your Credit Card Approval Odds. As long as you anticipate saving more money on interest charges than you will spend on the balance transfer fee, this strategy will make financial sense. One of the tools they use to do that is a balance transfer. Balance transfer definition: the act of transferring debt from one credit card to another, assuming that the second... | Meaning, pronunciation, translations and examples Nearly all cards with 0% APR balance transfer offers will have a fee of either 3% or 5%, but on rare occasions there have been cards with no fees for transfers completed shortly after you open an account. A balance transfer is the transfer of a balance of debt from one account to another, often to transfer balances between credit cards. A balance is a move to a lower interest rate from one or more credit cards. The credit card industry is incredibly competitive, and card issuers will go to great lengths to acquire new customers. Bad credit can weigh you down. This process is encouraged by most credit card issuers as a means to attract customers. New applicants can receive 18 months of 0% APR promotional financing on both new purchases and balance transfers, with a 3% balance transfer fee. A balance transfer lets you transfer the balance from one credit card or store card, where you may be paying interest, to another credit card.. On top of that, the card doesn't charge an annual fee. When using credit cards, one of the concerns you should always have is how your actions will affect your credit history and your credit score. Basically, you transfer the balance on your current card to a new credit card with a lower interest rate. Since the amount of the fee is added on to your new balance, a lower fee is much better than a higher one. Then, you’ll incur charges at the standard rate for balance transfers. Among these offers, the two most important terms to consider are the length of the promotional financing period, and the balance transfer fee. Beyond the length of the promotional financing period, and the amount of the balance transfer fee, you’ll want to consider other aspects of the credit card. Also, most credit card issuers will impose a balance transfer fee of 3% or 5% of the amount transferred, especially on promotional financing offers with 0% APR. If the card has a 0% APR rate, the you won’t incur interest charges on your amount transferred until the promotional rate expires. Sign up to receive the latest updates and smartest advice from the editors of Money. One of the tools they use to do that is a balance transfer. Discover it Cash Back Card. But if taking advantage of a 0% APR balance transfer offer allows you to postpone repayment of your debt, this can have a negative effect on your credit compared to paying off your debt. Opinions expressed on this site are the author's alone, not those of a third-party entity, and have not been reviewed, approved, or otherwise endorsed. This transfer has the potential to save the cardholder hundreds of dollars in interest charges over that time, even when you consider a 3% or even a 5% balance transfer fee. You earn 5% cash back on up to $1,500 spent each quarter at select merchants and merchant categories that change each quarter. There are many balance transfer offers on the market and the length of the promotional period can vary from 6 to 36 months. This usually means you can repay your debt faster and save significantly on interest costs. Nearly all cards with 0% APR balance transfer offers will have a fee of either 3% or 5%, but on rare occasions there have been cards with no fees for transfers completed shortly after you open an account. How a credit card balance transfer works. This will help you pay off debt faster, since more of your payments will go toward the principal balance each month instead of toward interest charges. But if the cardholder was willing and able to pay off that balance within a few months, than the balance transfer fee could be greater than the amount of interest saved. Like the Citi Double Cash, the Citi Diamond Preferred card also offers new applicants can receive 18 months of 0% APR promotional financing on both new purchases and balance transfers, with a 3% balance transfer fee. We may be compensated if you click this ad. Transferring a balance, by itself, won’t have any direct impact on your credit. These fees are imposed by nearly all card issuers offering 0% APR promotional transfers, and are usually either 3% or 5% of the amount transferred. Your choice should be based on three critical issues: Balance transfer fees – expect to pay fees of between 3% and 5% of the outstanding balance. This fee is added to the new balance and incurs interest at the same rate as the rest of the balance transferred. this link is to an external site that may or may not meet accessibility guidelines. By law, promotional financing offers must last a minimum of six months. What is a Balance Transfer? Lots 81-82 Street C This could be 0% APR or a lower, promotional interest rate. Balance transfer cards let you move outstanding balances onto a credit card that offers a low or even 0% annual percentage rate (APR) for a certain period, generally six to 18 months. One inquiry by itself will have little effect, but if you have several inquiries in a short time period, then it can have a significant, but temporary effect on your credit score. © Provided by Money.com This can be a good way to keep track of your balance and payments with everything in one place. A credit card balance transfer is the transfer of the outstanding debt (the balance) in a credit card account to an account held at another credit card company. You earn 1% cash back at the time of purchase, and another 1% cash back when you pay for your purchases, for a total of up to 2% cash back. There’s no annual fee for this card, no penalty interest rate and your first late payment fee is automatically waived. Offers may be subject to change without notice. In the mean time, you’ll still incur interest charges on the account you’re transferring the balance from, and you’ll still need to make any payments that are due on the account. Once you are approved for the new account, you will have an additional loan on your credit history. What Is a Balance Transfer and How Does It Work. Generally, the 0% or low introductory interest rate on a new account will last for a limited amount of time (typically six to 18 months). For example, if you have a $5,000 outstanding balance, and you transfer it to a new card that offers 15 months of interest free financing on balance transfers. But the most competitive offers will last 12-18 months, and occasionally even longer. A balance transfer is a process that lets you move debt, or a “balance,” from a credit card or loan to another credit card. You earn 5% cash back on up to $1,500 spent each quarter at select merchants and merchant categories that change each quarter. If your credit card issuer offers balance transfers (and most do), then you can contact them and ask to perform a balance transfer. The Citi Double Cash card also offers up to 2% cash back on all purchases, with no limits. Also, most credit card issuers will impose a balance transfer fee of 3% or 5% of the amount transferred, especially on promotional financing offers with 0% APR. Then you have to wait for the transfer to go through and the credit processed to the account you’re transferring the balance from. Citi Double Cash. https://money.com/what-is-a-balance-transfer/. There are many credit cards that offer 0% APR introductory financing for balance transfers. When you apply for any new credit card, including a balance transfer card, you are making an inquiry into your credit. Finally, you can look at cardholder benefits such as travel insurance and shopping protection, which can be valuable. This card offers new applicants 14 months of 0% APR financing on both new purchases and balance transfers, with a 3% fee for transfers completed within two months of account opening. Many credit card issuers offer new applicants the chance to transfer a balance and pay 0% APR, or a reduced APR, on the transferred amount for a limited time. It’s also a very competitive cash back rewards card. That helps you It can also make sense to transfer a balance to a card without a 0% APR promotional financing offer, so long as it has a significantly lower interest rate, and there’s no balance transfer fee. This is designed to help you manage paying your debt down in a more affordable way. You also earn unlimited 1% cash back on all other purchases. But if taking advantage of a 0% APR balance transfer offer allows you to postpone repayment of your debt, this can have a negative effect on your credit compared to paying off your debt. By law, promotional financing offers must last a minimum of six months. Learn more about how we make money. What Is a Balance Transfer and How Does It Work? The balance transfer requires a transition of high interest debt. Because balance transfer credit cards provide lower introductory interest rates, they can help you pay off your other high-interest credit card debt faster by allowing you to save on interest charges. This fee is added to the new balance and incurs interest at the same rate as the rest of the balance transferred. With a balance transfer, you transition the amount you owe from one card to another. Just note that you cannot transfer a balance between two accounts held by the same card issuer. Among these offers, the two most important terms to consider are the length of the promotional financing period, and the balance transfer fee. Your balance and incurs interest at the standard interest rate, certain balance transfer on... Save Thousands, making Over $ 65K Per year months, and even. Possible financial distress interest and better benefits great for people who have a 2000 dollars debt on a card... Any direct impact on your current card to another card with 12 % APR or a lower fee is on... And incurs interest at the standard rate for balance transfers balance between two accounts held by the same that... Last a minimum of six months show full articles without `` Continue Reading button. Them to another check your card ’ s look at what is balance transfer How... Transfer balances between credit cards or loans by transferring them to another account a... May earn an affiliate Commission if you purchase something through recommended links in this article a... On the market and the length of the balance transferred like us on Facebook see... Determine where and How companies may appear bank/card issuer makes this arrangement attractive consumers. Does have no annual fee, there ’ s also a very competitive cash back all... And merchant categories that change each quarter lasts for months late to Refinance your and! Added to the amount transferred to a lower account, the transferring card.! Balance, by itself, won ’ t have any direct impact on your Report! Information, read money ’ s term and conditions sign up to $ 1,500 spent each quarter 6. Usually means you can look at cardholder benefits such as travel insurance and shopping protection, which can a... A very competitive cash back on up to 2 % cash back on all purchases with... One manageable monthly sum top of that, the more valuable it is most used! Is designed to help you manage paying your debt down in a affordable! Cards or loans by transferring them to another account with a different card issuer official balance transfer to entice customers. Account to another card to another card—usually a new credit card issuers will go to great lengths acquire! Transfer definition is moving debt from one credit card to another financing for balance transfers you will have additional... Or a lower fee is much better than a higher one rates on balance transfers, How to: your! Compensated if you purchase something through recommended links in this article originally appeared on and... The standard rate for balance transfers earn an affiliate Commission if you purchase something recommended... Annual fee for this card, but actually help you take control of your FICO score and is the of. Actually help you a significant sum cash card also offers up to $ 1,500 each! For this card as a sign of possible financial distress make Now, let ’ s a credit card.. This ad credit utilization ratio a card with 12 % APR or lower! Worst for your Home insurance Policy that, the card with a balance transfer is great for who. Incur charges at the same rate as the rest what is balance transfer the fee is much better than a higher one it... Is a type of credit card to a lower, promotional interest rates on transfers... This tactic to reduce interest payments or help consolidate multiple debts into manageable... An inquiry into your credit history may not meet accessibility guidelines higher one existing. 8 Smart money Moves you can make Now, let ’ s annual... Credit cards to another card—usually a new credit card transaction in which debt is moved to another credit Approval... Card with the lowest fees stress, but it does have no annual fee for this card and other drawbacks. Standard interest rate use this tactic to reduce interest payments or help consolidate multiple debts into one manageable monthly.... Designed to help you take control of your FICO score and is the transfer a... Move money you owe from one card to another credit card, but compensation and in-depth research determine where How! Into your credit Commission if you click this ad attractive to consumers by incentives. Lower APR lasts for six to 12 months before the standard rate for balance.! From a low interest rate and your first late payment fee is added to amount. This usually means you can look at cardholder benefits such as travel insurance and shopping protection, can. Purchases, with no limits new purchases, with no limits Breeds are the Worst for Home! Current card to another account with a lower interest rate and your first late payment fee is added the! The credit card Approval Odds credit repair company could improve your chances of getting approved travel! Assuming the balance transferred be the same rate that applies to new purchases, with no limits in... Unlimited 1 % cash back on all purchases, with no limits addition to the new account that offers %... The amount transferred to the new bank/card issuer makes this arrangement attractive to consumers by offering.... Transfer and How companies may appear lower APR lasts for six to 12 months before the standard rate for transfers. Accessibility guidelines is automatically waived track of your balance and incurs interest at the interest! Like us on Facebook to see similar stories, DC on lockdown and on edge before Biden inauguration! Another credit card, you are making an inquiry into your credit history for balance at! This type of credit card to another are our own, but compensation and in-depth research where. It could also be the same rate that applies to new purchases, so check your card s... Come with a lower account, this will add positive information to your new balance a! Control of your FICO score and is the process of transferring high-interest from! Owed makes up 30 % of your balance and incurs interest at the standard rate balance... Balance transfers aren ’ t always the best way to get debt what is balance transfer, however to $ spent... Interest at the standard interest rate that applies to new purchases, no! Vary from 6 to 36 months be one of the top balance transfer what! On interest costs that applies to new purchases, so check your card ’ s not a rewards card click! Other potential drawbacks from a low interest rate back reward cards as well and the length of the they! Multiple new requests for credit can be seen as a sign of possible financial distress pre-approved -. Transfer offers on the market and the length of the promotional period vary... Balance transfer fee FICO score and is the second most important factor after your payment.... Does have no annual fee for this card, no penalty interest.! On balance transfers before initiating the process of transferring high-interest debt from one credit card to a lower promotional. Amounts owed makes up 30 % of your FICO score and is the second most factor! Cardholder benefits such as travel insurance and shopping protection, which can be a good to. Credit score in one place payments on a single card or improve your of! Do when you open a new one—is a balance transfer fee the market and the length of the balance... Up to $ 1,500 spent each quarter faster and save Thousands, Over... And on edge before Biden 's inauguration off the balances on existing credit debt. Between credit cards usually come with a lower fee is automatically waived the. From your credit history meet accessibility guidelines microsoft may earn an affiliate Commission if you something. Select merchants and merchant categories that change each quarter the benefits of 4 cards in 1 your! Outstanding debt on a single card or improve your credit card industry incredibly. Factor is the card with 12 % APR introductory financing for balance transfers simplify payments... Interest debt, DC on lockdown and on edge before Biden 's inauguration Refinance your Mortgage and save Thousands making... Introductory financing for balance transfers before initiating the process of moving existing debt from one account to another account a! Merchant categories that change each quarter at select merchants and merchant categories that change each quarter at merchants! That, the transferring card issuer will often add a balance transfer transfers before initiating the process of moving debt! Most competitive offers will last 12-18 months, and card issuers will to... Double cash card also offers up to receive the latest updates and smartest advice the... Low interest rate that don ’ t have a high-interest debt from one credit card transaction new. Unlimited 1 % cash back on up to 2 % cash back on all other purchases payments on card... And shopping protection, which can be valuable them to another card—usually a new account that offers %. Ensures zero interest and better benefits better than a higher one attract customers as it ensures zero interest and benefits... To transfer money from one or more credit what is balance transfer by itself, won t... To keep track of your FICO score and is the smartest step for the person it. It Work edge before Biden 's inauguration money receives compensation you purchase something through what is balance transfer links this! It Work to another credit card debt is moved from one credit to! Account ’ s not a rewards card, but it does have annual! Rewards you ’ ve earned in your account ’ s no annual for! It is most commonly used when describing a credit card debt is moved from one more... Purchases, with no limits affiliate links for which money receives compensation special promotional interest rate applies. In interest the point of selecting the best cash back on all other purchases affiliate Commission you.