They can be difficult to find, but there are credit cards that have no transfer fee. In the past, it was quite common to find credit cards that offered not only no fees to transfer balances, but also a 0% interest rate for a certain amount of time on the transferred amount.
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Being able to transfer money from a credit card with high interest to one with a lower interest is nice when you are working on paying down your debt. The problem comes when it costs money to transfer the balance. In that situation you need to calculate whether it is a good move over the long run.
How Balance Transfers Work
Credit cards are very convenient and are easy to use. Sometimes they are so easy to use that you can build up a balance quickly. If you are not careful and don’t budget carefully, your balance can get so high that you can only pay the minimum amount due every month. Soon the thought of being able to pay off the entire balance seems impossible.
This is where balance transfers come in. If your current credit card has a high APR, a good idea is to look for a card with a lower APR. It is even common to find some credit cards that offer an introductory rate of 4% or lower.
Once you have been approved for the lower interest rate card, the idea is to transfer the balance from your current card to the new one and began paying off the balance. Transferring a balance is very easy. Most credit card companies will provide convenience checks that you can fill out and send to the credit card company that you want to transfer the funds from.
Fees Associated with a Balance Transfer
If you can’t find a credit card that offers a deal for transferring a balance, it can be quite pricey to make a transfer. Most cards will charge a fee to receive the transfer. This is either a percentage of the amount transferred or a flat fee. The percentage can range from 1% to 5%. A flat fee may be anywhere from $35 to $100. Some cards will set a maximum to charge for a transfer.
Besides transfer fees, credit cards usually have a number of fees associated with them and it is important to understand them. Go to the Federal Reserve for more term explanations.
Disadvantages to Balance Transfers
Even if you can find a credit card that does not charge a transfer fee, there are some things to be cautious about. If you transfer to a card that does not have a promotional interest rate, the APR for transferring a balance is usually higher than that for purchases.
Also, keep in mind that interest starts accruing on transferred balances immediately, unlike for purchases which have a grace period. That is why transferring a balance to a card whose interest rate is not much lower is usually not a smart financial decision, especially if there is a fee associated with it.
The biggest thing to be aware of when transferring your balance to a card with an introductory offer of 0% interest, is that after the intro period, the rate will sky rocket. That is why you should really focus on paying off the card’s balance before the interest increases.
If you have a lot of credit card debt and you don’t know exactly how to pay it off, there are a number of resources to help you. One is Suze Orman’s website, which will walk you through how to decrease and eventually pay off your debt.
How You Can Find a No Transfer Fee Credit Card
Because most credit card companies have done away with the no fee and 0% interest rate offers for transferring a balance, it is much more difficult to find one. However, there are often a few offers available that you will find if you search for them.
Although credit card mailings have decreased in the last few years, you may receive an offering in the mail for a balance transfer promotion.
The easiest way to find one is to do an online search. Type in your key words in the search engine and you will get results for credit cards that offer deals for balance transfers. You can start your search right now with the FREE credit card chaser to find credit cards with no transfer fees!
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