According to the Federal Reserve, around 43% of people in the country end up spending more than they earn and use their credit cards to finance the shortfall. Piled up credit card debt is a financial burden and does not seem to get off your back easily. Transferring the credit card balance is a great idea that can help you to pay off the existing balance and rebuild your credit score.

What is a balance transfer credit card?
It works just like a regular credit card but comes with the option of transferring an existing balance. You can move a single balance or multiple balances from one card to another with the help of a balance transfer credit card. Whether you have a Visa and want to move the balance to a Mastercard or looking to move a store credit card balance to Discover, a balance transfer option works in every scenario. However, you cannot transfer the balance between cards issued by the same company. For instance, the balance transfer option is not applicable when you want to move it from a Chase Sapphire Preferred® Card to a Chase Freedom® car d .

Balance transfer credit cards come with a 0% introductory interest rate offer for a specific period and if you don’t settle the balance within the set duration, you end up paying a higher interest rate. So, it is essential to know about the features and need for such a card to be prepared and avoid paying extra.

Benefits of using a balance transfer credit card
If you are considering clearing your credit card balance, then going for a balance transfer credit card can be a great option.

• Elimination of high interest rates
  Choose this type of credit card smartly; your inbox would probably be overflowing with promotional offers on balance transfer credit cards. These credit cards claim to offer 0% APR for 12 months or would come with similar promotional deals.

  For instance, with a credit card balance of $2,000 and an APR of 15.99%, you will be charged an interest rate of 15.99% on your average daily balance on a yearly basis. And this amount is apart from the minimum amount that is mandatory to be paid. This simply means that you are nowhere going to get rid of the credit card balance in the short run. But if you transfer the balance amount to a credit card offering 0% APR for a period of 12 months, you avoid paying the high interest rate on the balance. Here, you only need to pay an approximate amount of $166 every month and can easily pay off the balance amount in the 12 months period, before the promotion ends.

  Paying the balance amount within the offer period can help you save hundreds of dollars that you would otherwise be spent as finance charges on high-interest credit cards.

• Consolidation of debt
  According to the Federal Reserve, as per March 2018, the country’s revolving debt stands at $1.027 trillion the bulk of which is credit card balances. Having multiple credit cards is a usual phenomenon but paying off credit card balance on time and avoiding paying a late fee can get daunting. You would also find people struggling with remembering the due dates and working on their budget to fix the credit card balance. A balance transfer credit card will help in simplifying multiple credit card balances by consolidating the debt. You can transfer all your credit card balances to one or two promotional cards and relieve yourself of the high-interest rates and get rid of your debt quickly.

  So, choose a card that offers a 0% APR. This will help you to not have to spend extra for the interest rate. Some of the top 0% intro APR credit cards that you can go for include Capital One® Quicksilver® Cash Rewards Credit Card, Chase Freedom Unlimited®, Discover it® Cash Back, Capital One® VentureOne® Rewards Credit Card, Chase Slate®, Discover it® Balance Transfer, and Wells Fargo Platinum Visa® Card.

What are the things to consider before getting a balance transfer credit card?
Before you select your credit card, explore all the options and research well to know which card is the best one for your balance transfer.

• Fees
  While transferring the balance from your existing account to another credit card, you will incur a fee, which varies depending on the transferred amount. A minimum of $5 to $10 fee is charged for transferring balances. However, for higher balances, you can expect to pay anywhere between 3% and 5% of the transfer balance amount. Although the fee might be daunting, you will be saving a huge amount in the long run.
• Credit card limit
  Verify the credit limit on your balance transfer credit card before you apply for it. You cannot transfer $4,000 onto a card with a credit limit of $3,000.
• Credit score
  Your credit score plays a crucial role in getting a low APR on balance transfer credit card. When you have a good credit score, your chances of getting a 0% APR on the balance transfer card are higher. On the other hand, a low or bad credit score will make it difficult for you to get this type of card. Even if you are eligible for one with a low credit score, you might get shorter promotional periods and higher interest rates. However, it is still a preferable option than having multiple balances on different cards.
• Duration
  Generally, any promotional offer on a credit card lasts 12 to 18 months. In some cases, you can also get an offer up to a period of 21 months. For smaller balances, you may only need 12 months to completely pay it off at a low-interest rate. On the other hand, higher balances might need more time to clear off and some credit cards may also charge a higher rate of interest for the same. Choosing a credit card with a longer duration will help you smoothly pay off the total balance. So, select a credit card that suits your specific needs. Also, it is important to note that if you fail to make any payments, most promotional offers will become void and you will end up paying the entire balance at full interest.
• Rate of interest
  When you want to go for a balance transfer credit card, choosing the one with the introductory 0% APR is a great deal. You can get this either by choosing an offer on an existing account or opening a new account. If you plan to transfer the balance to an existing account, ensure that the credit card you are transferring it to offers a better rate of interest than the previous one, or else you will end up paying more due to a higher interest rate.

  Promotional periods expire and you must keep a track of the duration these are on for. If the offer duration ends, you will be forced to pay off the remaining balance at the full interest. So, the best thing is to research the credit cards you are planning to apply for and check their rate of interest after the promotional offer ends. The standard interest rate ranges anywhere between 14% and 26%. If your selected credit card falls under this range, then you are good to go but if it doesn’t, look for other options.

Transferring the balance can have a positive effect on your credit score. So, the next time when you have your credit card balance piling up, don’t panic and open a new account to transfer your balance swiftly.