Balance Transfer Credit Cards - How Do They Work ?

A balance transfer is a simple strategy that many people use in order to obtain the most appealing interest rate. A credit card balance transfer requires that you take the balance on your current credit card and transfer it onto a balance transfer credit card from a competing credit card company.

It is important to note that while many credit card companies offer appealing balance transfer credit cards, you should first ensure that you are eligible to perform a balance transfer and lock in at a low rate before you initiate the procedure. If you have a low credit score, you may not find a credit card company that will offer you a balance transfer credit card until your credit score increases.

If you already have several different cards from competing banks.. you will more than likely receive balance transfer offers from your credit card issuers. You should always be sure at least a couple of your cards have a zero balance.

When a cardholder has a zero balance on their credit card.. the credit card company is missing out on an opportunity to make money. This will normally prompt them to start sending you balance transfer offers.

If you have had a zero balance on your credit card for 6 months or more and you have not received any balance transfer offers.. you may want to call the bank and inquire as to whether they have any balance transfer promotions that you could take advantage of.

Ideally.. you should take advantage of only the offers that will give you a promotional interest rate for at least a year or more. If the promotional rate is only for 90 days it may not provide much benefit.. depending on what the go-to rate is at the end of the promotional period.

Frequent moving of balances from one credit card to another will send up red flags - you will not proceed completely unnoticed. If you are regularly transferring balances from one credit card to another, you run the risk of negatively affecting your credit score.

Credit card companies monitoring your migrant tendencies may decrease your credit line and/or may increase the interest rate available to you. Credit card companies grow weary of individuals who have a history of moving balances between credit cards, and therefore, may give you a higher interest rate to ensure they will not lose money by taking you on as a customer.

This is another reason you may not want to accept balance transfer offers that are for short periods of time. Again.. this will depend on what the go-to rate will be at the end of the balance transfer promotional period. If the go-to rate is higher than the interest rate you are already paying.. then making the transfer is probably not in your best interest.

It can feel like finding a pot of gold when you find a balance transfer credit card which offers an extended length of time for the 0% introductory rate and other incentives to encourage you to initiate the transfer. However, as with anytime you engage in transferring a balance, it is essential that you do ample research into exactly what the new credit card provides.

Chances are good that any company offering balance transfer credit cards is using the tried and true credit card balance transfer strategy to get a quick influx of clients. Educate yourself so you can make an informed decision about your own balance transfer possibilities.

Is your credit score high enough to qualify for a balance transfer card?

Has it been at least 90 days since you last applied for credit?

Are you using less than 40% of your total available credit?

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