What Is a Balance Transfer? A Useful Guide for 2023
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What Is a Balance Transfer? A Useful Guide for 2023Are you tired of repaying credit card debts with unbearable interest rates and EMIs? Wouldn’t it be great to keep the extra cash you pay every month? This is possible when you combine all your credit card debt into a single balance transfer credit card. If you want to know more about balance transfers and credit cards in detail, this article aims to guide you through the necessary information.
What Is a Balance on a Credit Card
What is a balance transfer – Balance
Let’s say you have a credit card as your primary credit line. You are approved for a $5000 credit limit from which $1000 has been spent towards essential products. The remaining amount on your credit card of $4000 is the credit card balance and the amount used ($1000) is the balance you owe to the credit card issuer. Repaying the debt includes interest charges and monthly installments, which are calculated based on the balance you owe to the credit card company. It is possible to confuse the credit limit balance and the balance that is owed.
What is a Balance Transfer and FeesA balance transfer is when you transfer the balance from your existing credit card debt to another credit card. A balance transfer credit card is a type of credit card that a consumer uses to consolidate all his credit card debt under a single credit card. Usually, balance transfers are made from multiple credit cards to a single balance transfer credit card. This process involves a balance transfer fee of 5% or lower, for debt consolidation. For example, if you are transferring a balance of $1000, the transfer fee would increase the value to $1050 as your new balance. The balance transfer fee is collected either in cash or added to your balance transfer credit card. Depending on different credit lending agencies, the transfer fee varies. Typically, the fee is not more than 5%.
Need for Balance Transfer Credit CardsYou might wonder, what is the need to move debt from one card to another? The following are some benefits of using a balance transfer credit card:
- Low introductory interest rate.
- Moving from a high APR to Lower APR.
- Can quickly pay off your debt.
- Easy to monitor and control all your credit card debt in one place.
Requirements for Balance Transfer Credit Cards
What is a Balance Transfer – Requirements for a Balance transfer credit card
To qualify for a balance transfer credit card, you must have the following requirements:
- The account details for your existing card’s balance. This includes your social security number, as well as your loan or credit card application details.
- A credit score of 670 or above is required to qualify for the balance transfer card. In almost every case, you must have a good or excellent credit score to qualify for a loan and credit card.
- The application process for a balance transfer card begins with your credit check, submitting the balance transfer application, personal data verification, and agreement to the loan terms.