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How to complete a balance transfer
Here are steps to consolidate your debt and save on interest.
A balance transfer may be a great option to move high-interest debt to a new card with low or 0% intro APR. Furthermore, many cards offer attractive choices for benefits and rewards. Figuring out how to make a balance transfer, however, can be confusing.
How to make a balance transfer in 4 steps
Step 1: Compare your options
It’s important to compare the numerous 0% intro APR balance transfer offers on the market before deciding which will best serve your needs. Compare options based on the following:
- Promotional interest rate. Most balance transfer credit cards come with a 0% balance transfer intro rate, but some may offer a slightly higher — but still relatively low rate.
- Length of the introductory period. The introductory period usually lasts between six and 21 months. Naturally, the longer the period, the greater your possible savings.
- Revert rate. When the promotional period ends, a revert interest rate will apply to your balance. This is usually a higher interest rate, such as the standard purchase and cash advance rate, so factor it into your calculations if you can’t pay off your debt within the intro period.
- Balance transfer limit. There’s a limit to the amount you can transfer, and this varies among different cards. Usually, you can transfer 70% to 100% of your maximum credit limit.
- Eligible issuers and cards. Typically, you can’t make balance transfers between cards issued by the same bank or card provider.
- Balance transfer fee. You may be charged a one-time fee for the balance transfer, typically up to 5% of the transferred amount. You may want a card with no balance transfer fee if you’re transferring several balances — otherwise, this fee could offset your interest savings.
- Rewards. Check if your card comes with any rewards or benefits such as travel rewards, interest-free days or 0% intro APR on purchases.
- Other card features and fees. It’s often best not to use a balance transfer card for purchases, as your primary goal is probably to pay down your debt. If you plan to use the card beyond the balance transfer offer, however, consider the annual fee, purchase rate, cash advance rate, cash advance fee, foreign transaction fee and other fees.
- Creditworthiness. Your creditworthiness will play a huge part in which balance transfer credit cards you’ll qualify for.
Compare balance transfer credit cards
Step 2: Apply for a credit card and request a balance transfer
Now that you’ve chosen the perfect card, it’s time to submit your application. When filling out your application — online or through the mail — you can include balance transfers you wish to make. You’ll need to provide the account number and the amount you wish to transfer. The exact amount you can transfer will be determined once your application has been approved.
Your new card provider will transfer the balances on your behalf upon approval, up to the stated limit minus transfer or annual fees. Continue to make the minimum monthly payment on your old card until you have confirmed the transfer’s completion.
If you submitted your application without making any balance transfer requests, you can request transfers after approval. Do this in one of two ways:
- By phone: Once you receive your card in the mail, call the number on the back of the card. A representative will help you complete your transfer.
- Online: Sign up for online banking after you receive your card. Once you’ve created your online account, follow the instructions to complete the transfer.
Try to complete the transfer as soon as possible. If you wait longer than 60 days, you may lose your promotional APR.
It typically takes five to seven business days to be approved. If you haven’t heard back after this time, contact the bank to find out if there’s an issue. You may be asked to provide additional information.
Step 3: Consider closing old cards.
Once you’ve received your new credit card and your balance transfer has been processed, you may want to close your old card account. Verify with your old bank that the transfer is complete.
If your old card has an annual fee, you can close it and avoid further charges. If it doesn’t, you don’t necessarily have to close the account. Having open lines of credit that you aren’t using can one of the factors improving your credit score.
Step 4: Start paying off your debt.
Once your balance transfer is complete, note how long your promotional APR lasts. If you have a balance after the APR expires, it will start accruing interest at the revert rate.
Try to make more than the minimum payment each month to repay the entire debt before that time. If necessary, seek free help for managing your debt.
A balance transfer may buy you some interest-free time to repay your balance, and ultimately save you money. With some discipline and commitment, you can be debt-free faster than you thought.
Transferring your balance after you apply for and receive your card
Your balance transfer promotion won’t last forever. However, you’ll have time to qualify for your promotional interest rate. Check with your provider if you’re unsure of its rules.
Card providers that offer the promotional balance transfer after application
American Express typically lets you transfer a balance at the promotional interest rate up to 60 days after you’re approved for the card.
Bank of America usually lets you transfer a balance at the promotional interest rate up to 60 days after you’re approved for the card.
Capital One doesn’t specify cutoff dates, but double check with a bank representative to be sure.
Chase doesn’t specify cutoff dates, but double check with a bank representative to be sure.
Citi lets you transfer a balance at the promotional interest rate up to four months after you’re approved for the card.
Discover will periodically change the cutoff date by which customers have to transfer balances to receive promotional APRs. Typically, this will be 60 to 90 days after you apply for your card.
Costs and benefits of balance transfers
What you get out of a balance transfer card largely depends on your ability and willingness to make a plan and stick with it. Part of organizing that plan should be comparing the features of a balance transfer card with what you’re seeking to get out of it.
What you might save
When you apply for a new card, you may be offered an introductory rate that is low or even 0% interest for a temporary period of time. The intro period you’re offered is dependent upon your credit score and it usually lasts for a temporary period, such as 6, 12, 18 or even 21 months.
How much does it cost?
Most cards will charge a fee to transfer your debts, usually between 3 and 5% of the debt amount, so make sure to compare this to how much you’ll save on interest during the promotional APR period.
Making a balance transfer can seem complicated, but it can be much simpler if you take it step by step. If you’re ever unsure about any part of the process, just give a call to your card provider.
Before making the transfer, compare your balance transfer options to get the best credit card for your situation. Intro period, transfer fees, ongoing rates and other factors will affect what card ends up being the ideal choice for you.
After you’ve made your balance transfer, keep track of which of your old cards you still need to make payments on. Then note details about your balance transfer, such as the time you have to make other transfers and how long your promotional interest rate lasts.
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