When you have a large balance on a credit card, it might be worth thinking about transferring the balance to a different card. In this article, we will discuss the pros and cons of doing just that. It’s an option that can help people get out of debt, but you need to be aware of the caveats. Getting out of debt is an important aspect of financial freedom, and after the economic turmoil of the last several years, many people have been left with worse employment and more debt. A balance transfer can really help you move out of debt as long as you do all of the right research and are responsible about the balance.
Transferring your balance to a new card has one major benefit- you can reduce the interest rate on that balance. Many cards are geared for balance transfers and give you a long grace period with no interest for a set period- often 18 months. Seek out these 0% interest credit cards to transfer credit card balances. These transfers are better than loan consolidation, because they involve cutting the interest to zero rather than combining loans.
One thing to be aware of is that on balance transfer cards, the interest rate often gets pretty high once the grace period ends. Those 0% interest credit cards can wind up with an APR of 20 percent or more after the introductory rate expires. If you haven’t paid off the balance by then, you will face some pretty big interest charges. Be ready for that, because those big rates are the way the bank makes money on these cards. They hope you will to fail to pay off the balance and wind up having to pay interest.