How to Save with Balance Transfer Credit Cards
Balance transfer credit cards are great tools for reducing your credit card debt while saving you money. These cards allow you to transfer your balance from your current card to a balance transfer credit card. This gives you access to a low interest rate for a certain period of time. Making the transfer will allow you to settle your balance without accumulating additional debt.
To take advantage of a balance transfer credit card by making sure you also save money in the process, follow these steps:
- Transfer your current credit card balances to your balance transfer credit card.
- Create a payment plan that will allow you to refund the full balance by the end of the promotional period.
- Do not accumulate additional interest debt.
How a balance transfer credit card can save you money
Let’s look at an example that shows how a balance transfer credit card can save you money. Say, you have accumulated $ 3,000 in debt on a credit card that charges an interest rate of 19.99%. We will assume that you make monthly payments of $ 60 in order to meet a minimum monthly payment of 2% (which varies depending on the cards).
Next year you will earn $ 588 in interest. If you transfer this balance to a card with a 0% interest rate, you will save a total of $ 588.
Since you have a 0% interest rate on the balance transfer card, the only thing you need to focus on is the $ 3,000 payment. That’s $ 250 a month. If you keep this payment plan you will not balance when the promotional period ends. This is necessary if you want to avoid potential increases in your interest rates.
Some balance transfer credit cards charge a balance transfer fee. Let’s say that in order to transfer $ 3,000 to the 0% APR credit card, you will be charged a 3% fee. This would amount to a total of $ 90. Even with the 3% balance transfer rate transfer fees you will still save $ 498.
Interest rate on a balance transfer card
However, you must be aware that the interest rate on a balance transfer card will increase after the end of annual promotional interest rates. You must collect a balance transfer card as a good opportunity to settle your credit card debt in a certain period. Be careful not to have a high balance on your credit card after the introductory period or you will be charged even higher interest rates again.
- No annual fee
- Balance transfer rate at 0% interest for the first 12 months
- Accident insurance and trip interruption insurance
Have you fallen deeply into your credit card debt? Are you looking for a way to settle your balance in about a year? MBNA Platinum Plus MasterCard could be a good option. This credit card offers a promotional interest rate of 0% on all balance transfers. In addition, the card has no annual fee.
These represent two effective ways to save money. You will not have annual fees and you will not have any interest payments during the first year.
You, however, will have to pay 1% or $ 7.50 (the largest) fee for the balance transfer amount. This still provides an excellent opportunity to make payments on the debt you have accumulated with less additional expense. This is certainly one of our main recommendations regarding balance transfer credit cards.
Good Finance Card from Express
- 5% discount rate on qualifying purchases from gas stations, grocery stores and restaurants in Canada (up to $ 250 rebate) within the first six months of your membership
- Cash back 1.25% on all other purchases and even when your welcome rate ends
- No limit on the amount of cash back after the end of the welcome period
- No annual fee
The Express Good Finance Card differs slightly from the previous card because it is a reward credit card that also offers the balance transfer option. If you want to transfer your credit card debt to your Good Finance card at the time of your application, you will pay a 0% interest rate on the balance transferred for the first six months.
Also this card has no annual fee and only charges a 1% balance transfer fee. You can transfer one up to half of your credit limit or $ 7,500 (the lesser of the two).
The other benefit that comes with this card is the potential to accumulate the rebate reward once you have settled the balance transfer. For the first six months, you’ll earn a 5% rebate (up to $ 250) on eligible purchases such as gas, groceries and restaurant expenses.
In addition, you will accumulate a discount of 1.25% as well as on all your other purchases. This is an excellent card if you are looking to pay off the balance on your credit card but are also looking to continue using it after you have repaid your current debt.
Debt on their credit card
Balance transfer credit cards can be very beneficial to those who have a debt on their credit card. It’s important to consider: the interest rate, the length of the introductory period, the balance transfer fees and the features that are important to you.