A balance transfer is a process in which debt is moved from one account to another. This is a kind of credit card transaction. It can be a clever idea to save money on interest charges. For them who are paying down high-interest debt, you should do strategically to save serious money on interest charges.
Balance transfers work by applying for a new card with a low introductory APR (Annual Percentage Rate), initiating a balance transfer and paying down the balance. Let's understand this with an example, if debt moved to a credit card with a 0% introductory APR offer on balance transfers could potentially be paid off interest-free.
Why should you do balance transfer?
If you are able to manage the pay off balance in three months or sooner, or you can't qualify for a good 0% APR offer, paying off your debt as soon as possible would be the best, most cost-effective option for you. If you are looking for a higher limit and you don’t have any problem in paying some interest, in this case a personal loan could be a good match for you. Now, you can pre-qualify for one to see how much you could borrow and what interest rate you could get before accepting an offer.
But in general, a balance transfer is the most appropriate choice if you need more time to pay off high-interest debt and you want to get good credit score to qualify for a card with a 0% introductory APR on balance transfers loan. Such a card could save you plenty on interest, this can be immensely helpful for you and can give you an edge when paying off your balances.