ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel
  • »
  • Personal Finance»
  • Managing Credit Cards & Payment Options

What is a Credit Card Balance Transfer?

Updated on June 18, 2012
A credit card balance transfer can help you escape from credit card debt
A credit card balance transfer can help you escape from credit card debt

Credit card interest rates are some of the highest borrowing rates around and many people find themselves barely managing to pay off the monthly interest, let alone the total balance owing on the card. The common feeling is “If only I didn’t have to pay the high interest amount then it would give me breathing room to reduce my credit card debt”.

This is where a credit card balance transfer is a great option.

So what is a credit card balance transfer?

A credit card balance transfer is where you transfer the balance owing on your existing credit card to a new credit card at a different bank. Because banks see credit card users as a lucrative market and they plan on making money off you from your future borrowings, they often incentivise you to transfer your credit card debt to their card by offering a low rate of interest on the balance you transfer.

Credit card balance transfer interest rates can be as low as 0% (although are more commonly 2-5%) and these interest rates generally last for either a fixed period of time, say 9 months, or for the life of the debt.

Some banks even offer balance transfers where you can transfer the balance from multiple credit cards at the same time. This is especially attractive as it means that rather than juggle multiple cards and multiple monthly payments, you have one single payment each month. This makes it much easier to plan your payments and avoid incurring the high fees that banks charge for late or missed payments.

5 rules for choosing the best credit card balance transfer

  1. Firstly, look for a credit card balance transfer that offers the lowest interest rate. Even small differences in interest rate can over time make a big difference in how much interest you pay.
  2. Look for an offer that provides the low interest rate for the longest possible period of time. The best option here is to opt a credit card that locks in the low rate for the lifetime of the debt.
  3. Make sure you look at the annual or monthly fees that come with the credit card you are transferring to. If these fees are high then this might end up costing you more in fees than you save on interest.
  4. Check to see if there is a one-off fee the bank charges for making a credit card balance transfer
  5. Check to see what the interest rate will be at the end of the low interest period. Most of the time this interest rate will be the bank’s standard rate; however in some cases there are higher interest rates for credit card balance transfers.

Comments

    0 of 8192 characters used
    Post Comment

    • kiwitom profile image
      Author

      kiwitom 5 years ago from Perth, Australia

      You should check with your particular provider however in most cases the balance with the lower interest rate gets paid off first. This is why it's important to view a balance transfer as something that can help you while you pay off your debt completely, rather than something that will simply temporarily rediuce the interest on existing debt so that new debt can be created!

    • dpsimswm profile image

      dpsimswm 5 years ago from Richmond, Virginia

      What happens if I continue to use my credit card for everyday purchases? Which balance is paid first, the transferred balance, or the purchase balance?

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: "https://hubpages.com/privacy-policy#gdpr"

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized. (Privacy Policy)
    CloudflareThis is used to quickly and efficiently deliver files such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisements has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)