Zero Balance Transfer Fee Credit Cards
Credit cards give you plenty of advantages, from an easily accessible line of credit to providing you with rewards. One particular advantage of credit cards is that some offer zero balance transfer fees. A balance transfer moves a balance from one credit card to another. Credit card companies encourage you to use balance transfers so they make money from the interest. However, you can have a balance transfer save you money when you look for offers that don't charge fees.
What is a Balance Transfer?
A typical balance transfer involves an interest rate that's either the same as normal charges on the credit card or a special promotional rate for balance transfers, as well as a fee for transferring the balance. When you find special balance transfer offers, you typically have a 0 percent interest rate for six months to a year, with no fees associated with transferring a balance. With careful credit management, you save a great deal of money by moving your balances away from high interest rate cards.
The Right Way to Save with Balance Transfers
The first step is finding a credit card offering a promotional balance transfer offer. Check the fine print to ensure that the balance you transfer gets the promotional rate and you don't have a charge for it. Apply for cards with appropriate offers to make sure you get at least one card that fits your needs.
Once you have the card in hand, look up the balance transfer process for it. Some companies send you checks that you make out to your existing card companies to transfer the balance. Others give you an online system for processing credit card balance transfers. Submit the balance and card information for your existing balances if you're using an online system instead of a check.
Wait seven to 10 business days, then check your new credit card balance. You'll see the balance transferred from your old card to your new card. Your old card no longer has any balance, as your existing credit card company is paid by the new card.
You save money by not paying interest on the balance you transferred. If you left the balance on your original card, you would pay interest on it. When you transfer it to a card without an interest rate, you don't pay interest during the promotional period. The trick to saving money with zero balance transfer fee credit cards is to pay off the balance before the promotional period is up or transfer it to another credit card with a balance transfer promotion. The main goal is to avoid paying interest on your balance. When a promotional period lasts up to a year, you have that much extra time before you have to worry about interest again. If you carry high balances, this could result in significant savings.
Transferred Balance vs Monthly Purchase Balance
Another important consideration to keep in mind with these cards is that normal purchases on the new card have its standard interest rate, not the balance transfer rate. Don't assume that the entire balance on the card isn't getting charged interest. Talk to the credit card company to determine which balance your monthly payment goes toward first: the transferred balances or your purchase balance that's charged interest. Ideally, you want a card that pays the balance that is getting charged interest first, before worrying about the zero interest amount.
Zero balance transfer fee credit cards are a valuable tool for saving you money in the short and long run. In addition to avoiding interest fees, you also have an extended time to pay the balance principle down before interest is added to the payment amount. You don't have to apply for a completely new card either. Some credit card companies offer special balance transfer promotions to encourage card usage and provide incentives for moving balances to their company.