{"id":1036,"date":"2020-09-14T09:00:00","date_gmt":"2020-09-14T14:00:00","guid":{"rendered":"http:\/\/ec2-3-209-223-66.compute-1.amazonaws.com\/?p=1036"},"modified":"2023-12-20T17:32:04","modified_gmt":"2023-12-20T23:32:04","slug":"pros-and-cons-of-a-credit-card-balance-transfer","status":"publish","type":"post","link":"https:\/\/www.accrediteddebtrelief.com\/blog\/pros-and-cons-of-a-credit-card-balance-transfer\/","title":{"rendered":"Pros and Cons of a Credit Card Balance Transfer"},"content":{"rendered":"\n

A balance transfer credit card with a low or no-interest introductory period could help you pay down your principal and save a lot of money in interest. Considering all the pros and cons of a credit card balance transfer will help you make an informed decision about this option.<\/p>\n\n\n\n\n\n\n\n

How much is your unpaid credit card balance costing you each month in interest? According to Federal Reserve data for the first quarter of 2020, the average APR on credit card balances is 15.09%<\/a> which means if you carry an average balance of $6,194<\/a>, you could be paying $70 or more in interest each month. That\u2019s the costly reality for people who are only making minimum payments on high-interest credit card debt.<\/p>\n\n\n\n

Key Features of a Credit Card Balance Transfer<\/h2>\n\n\n\n

Credit card balance transfers almost always come with a special introductory period. This means for a predetermined number of months, the lender will charge you a reduced interest rate on your credit card balance.<\/p>\n\n\n\n

This period typically lasts 5 to 21 months, and the most desirable offers are for 0% interest. During that time 100% of your payments will go directly to paying off the principal balance.<\/p>\n\n\n\n

Minimum credit card payments are typically 1% to 3% of your credit card balance, but if you qualify for a balance transfer credit card with a 0% introductory rate, you\u2019ll want to take full advantage of this by paying as much as you can each month to drive down your principal balance. The best way to do this is to commit to a fixed payment that works in your budget.<\/p>\n\n\n\n

The Cost of a Credit Card Balance Transfer<\/h2>\n\n\n\n

Lenders who offer balance transfer credit cards charge an upfront fee that is a percentage of the amount being transferred. This is usually 1% to 3% of the balance and is added to your principal. <\/p>\n\n\n\n

This is one way that lenders can make an immediate return on your debt since they won\u2019t be collecting any interest until the introductory period is over. <\/p>\n\n\n\n

Balance credit cards also have many of the same fees associated with regular credit cards. Expect to pay late fees if you miss a payment and service fees if you take a cash advance, or use the card internationally. <\/p>\n\n\n\n

All terms and fees will be listed in detail on your application. This includes the interest rate on the card after the introductory period is over. <\/p>\n\n\n\n

Making Minimum Payment on Your Credit Card Balance<\/h2>\n\n\n\n

If you carry the national average balance of $6,194 and are only making 3% minimum payments, you could be spending $77 or more in interest each month. That may not seem like a lot at first, but over the course of a year, you could be shelling out $900 just to cover the interest on your debt.<\/p>\n\n\n\n

Not only that, If you only paid the minimum balance it would take you a staggering 15 years and $4,217 in interest, and that\u2019s only if you stopped using the card altogether!<\/p>\n\n\n\n

With this data in mind, the benefits of a special interest rate offer come into focus.<\/p>\n\n\n\n

The Pros and Cons of Using a Balance Transfer Credit Card <\/h2>\n\n\n\n

Pros<\/strong><\/p>\n\n\n\n