Does 0 interest rate credit card balance transfer really works? That is the first question that arises when you are unable to pay the debt of your credit card and searching for a a solution .Don’t worry, you’re not alone! The accumulation of interest rate charges can sometimes become daunting if you don’t pay the amount at regular intervals. It takes a different turn when it’s not paid for months or even years. We are going to provide you all the knowledge base that will guide you on credit card 0 interest balance transfer schemes by various balance transfer credit cards companies.
- 1 Video : 4 most things to look for in balance transfer card
- 2 How does a 0 interest rate credit card balance transfer work?
- 3 Are you fit for 0 interest rate credit card balance transfer?
- 4 Is there any hidden cost in credit cards providing zero-interest balance transfer?
- 5 Why should you not rush to cancel the old card after a balance transfer?
- 6 Don’t forget !Balance transfer affects your credit score.
- 7 How quickly the balance transfer happen?
Video : 4 most things to look for in balance transfer card
How does a 0 interest rate credit card balance transfer work?
The credit card issuers took note of this problem of credit card debts and came out with what we call, promotional interest rates, generally to attract new customers. Don’t get scared by the length of its name. It means when your credit card balance is out of your control, you can transfer it to another credit card where you won’t be charged any interest or low interest for a period.
You might be wondering how that works, let me explain you. 0% APR on balance transfer cards work is similar to regular credit cards .
A 0 interest rate balance transfer credit card pays your credit card debt and put that debt as as your debt with them . As an intro offer ,they also allow a period upto which 0% APR is effective.Thus , now you get time to payback your debt with earlier card without incurring huge interest cost.
The amount you transfer will be taken off the original credit card and put onto the balance transfer card.
Are you fit for 0 interest rate credit card balance transfer?
Finding yourself fit for a zero fee balance transfer card require you to answer :
- What is your credit score ? It is no secret that only those who have good tor excellent credit score can hope to get the 0% interest on balance transfer credit cards.What credit score do you need for a balance transfer credit card? If you are asking “What credit score is good for a balance transfer credit card? “, then take for granted that you need You usually need a score of 670 or higher to qualify for a 0% intro APR balance transfer credit card.
- Can you transfer balance within a period of 30 to 45 days ? That is the period within which most credit card companies who offer 0% interest on balance transfer , require you to complete the balance transfers .So ,point for consideration is if your credit card company lets you transfer the balance within the timeframe set by the credit card where you desire to transfer the balance.
- Do you have some money each month to repay the credit card debt ? That will decide types of 0% interest Credit Cards for Balance Transfer you should go for .Should you opt for a 6, 12 ,15-, or 21 or 24 month interest-free period ?
Since the primary objective of using such cards is to pay off another credit card debt, you should not use such a card for new purchases. Otherwise the whole purpose of getting balance transfer cards dies. You will be in debt trap .Anyone who has a repayment plan made before applying for 0 interest rate credit card balance transfer will be perfect person to utilise this solution offered by another card company.
Pros & Cons of 0 Interest rate credit card balance transfer
There are Pros for credit cards with 0% APR offer , but there are a number of disadvantages of credit cards as well.
The biggest advantage is available of higher time period to payback your debt. The second pros for balance transfer is 0% interest for a time period ranging from 6 months to 24 months.
- 0% interest type cards are offered only to people having high credit scores -Good to Excellent.
- 0% APR may only be on certain types of use like balance transfer and purchase.That too only works within interest-free period .But , say you draws cash advances , you may end up paying very high interest rate .
- Credit card may apply a limit on the amount of balance transfer which is covered under 0% APR offer.
- Like normal credit card , if you do not pay at least your minimum monthly payments on time , credit card company might cancel the 0% offer altogether or may also levy higher APR as a penalty for default in payments.
You may be wondering all this while that why & how credit card issuers charge nothing and still are in profit? So, the answer to this is- they do charge fees that get hidden below the surface.
- First hidden cost may be very APR on purchase or balance transfer once the period of no fee or 0% interest is over. Therefore , you must read the fine print before applying to 0% interest on balance transfer credit cards.
- Second hidden cost may be very high balance transfer fee -3% or 5% of the transaction amount with a $5 minimum. So, a balance transfer of $10,000 will become $10,300 with the credit cards offering 0% interest on balance transfer !
- Third hidden cost that you should check out is the annual fee. Whether the annual fee was waived for only the period during which the 0% interest on balance transfer was active or no annual fee is valid for life.
Why should you not rush to cancel the old card after a balance transfer?
You may be wondering if you should just cancel the old card after successfully enrolling for 0 interest rate credit card balance transfer . It is prudent not to rush for cancelling the old credit card. This can cause your credit score to drop, because your credit utilization will increase when you cancel the card and lose a portion of your available credit. Unless the card has an annual fee or you’re worried you’ll continue using it, you’re likely better off keeping it open.
How balance transfer credit cards affect mortgage application?
Fact is that a 0 interest rate balance transfer credit card ,usually , affect your chance of getting a mortgage on properties. What actually may affect is the debt because of the credit card.It is routine for lenders to check your debt-to-income ratio as well as your credit score when you go for a mortgage. The credit score after balance transfer goes down a little . Both these parameters get affected because of credit card debt. Having a high debt-to-income ratio due to debts accumulated on the credit card you have, is surely going to have high negative impact on your mortgage application.
Don’t forget !Balance transfer affects your credit score.
You can expect a slight decrease or increase in your credit score after a successful balance transfer. The reason for this can be
- New inquiries with respect to your credit report,
- Average age of accounts decreased or
- The credit utilization rate changed adversely.
But don’t worry , if you settle your balances and timely payments of your debts with the credit card company that allowed 0 interest rate credit card balance transfer , your credit score improve over a time period.
How quickly the balance transfer happen?
It depends on the balance transfer card companies. But generally , it takes from 2 days to 6 weeks. Since the balance transfer involves two different companies,
time of final balance transfer may get delayed for unforeseen reasons.Following is the average maximum time taken by various credit card companies for balance transfer :
|Credit Card Company||Maximum Time for Balance Transfer|
|Bank of America||2 weeks|
|Capital One||10 business days|
Choose credit cards that suit your needs and always divide the pending amount by the number of months so that you won’t get further debt. Beware of companies that make false promises and unbelievable offers. There are several hidden costs involved behind the click baits. 0% interest balance transfer is great when you don’t have a huge amount to repay. You’re allowed to transfer a certain amount range, more than that can cost you additional charges by the bank.