All About Balance Transfers: Is It the Right Choice for Your Debt?
For many, managing credit card debt can feel overwhelming, especially when high interest rates make it difficult to make significant progress. A balance transfer can be a powerful tool for getting a handle on that debt by moving it from a high-interest credit card to a new one with a much lower—often 0% introductory—interest rate. However, this strategy is not without its risks. This guide will provide a detailed and helpful overview of how balance transfers work, their pros and cons, and how you can decide if it's the right choice for your financial situation.
How a balance transfer works
A balance transfer is a process where you move an existing credit card debt from one or more accounts to a new credit card. The new card will typically offer an introductory period (which can last from 12 to 21 months) during which you pay no interest. This gives you a crucial window of time to pay down the principal without the burden of high interest charges.The pros and cons of a balance transfer
The Pros:
The Cons:
How to choose the right balance transfer card
When shopping for a balance transfer card, don't just look for the "0% APR" sticker. You need to read the fine print and compare the key features.A step-by-step guide to a balance transfer
1. Assess your debt: Review all your current credit card statements to see which balances have the highest interest rates. This is the debt you want to pay off first.2. Check your credit score: Know your credit score before you apply. This will help you know what kind of offers you can expect to qualify for.
3. Shop and compare: Use comparison websites to find the best balance transfer cards for your credit profile and debt size.
4. Apply and initiate the transfer: You can often initiate the transfer as part of your application or once you are approved. You will need the account information for the cards you are transferring from.
5. Create a repayment plan: Take the total transferred balance (including the fee) and divide it by the number of months in the introductory period. This is the amount you need to pay each month to be debt-free before the promotional rate expires.
The fine print and best practices
Is a balance transfer right for you?
A balance transfer is an ideal solution for those with a clear plan to repay their debt. If you are struggling with high-interest debt and are disciplined enough to stick to a repayment plan, it can be a powerful tool for taking control of your finances. However, if you are prone to racking up new debt or are unsure you can pay off the balance before the promotional rate expires, other debt management options may be a better choice.Related credit card articles
Examples of Balance Transfer Credit Cards
Below is list of Balance Transfer Credit Cards that are available to apply for online.Citi® Diamond Preferred® Card
- 0% Intro APR on balance transfers for 21 months and on purchases for 12 months from date of account opening. After that the variable APR will be 16.99% - 27.74%, based on your creditworthiness. Balance transfers must be completed within 4 months of account opening.
- There is a balance transfer fee of either $5 or 5% of the amount of each transfer, whichever is greater
- Get free access to your FICO® Score online.
- With Citi Entertainment®, get special access to purchase tickets to thousands of events, including concerts, sporting events, dining experiences and more.
- No Annual Fee - our low intro rates and all the benefits don’t come with a yearly charge.
Citi Strata℠ Card
- Earn 30,000 bonus Points after spending $1,000 in the first 3 months of account opening.
- 0% Intro APR on balance transfers and purchases for 15 months; after that, the variable APR will be 18.99% - 28.99%, based on your creditworthiness. There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).
- Earn 3 ThankYou® Points for each $1 spent in an eligible Self-Select Category of your choice (Fitness Clubs, Select Streaming Services, Live Entertainment, Cosmetic Stores/Barber Shops/Hair Salons, or Pet Supply Stores). Choose your eligible Self-Select Category on Citi Online or by calling customer service. The default Self-Select Category is Select Streaming Services.
- Earn 5 ThankYou® Points for each $1 spent on Hotels, Car Rentals and Attractions booked on Citi Travel® via cititravel.com; earn 3 ThankYou Points for each $1 spent at Supermarkets, on Select Transit purchases, and at Gas & EV Charging Stations.
- Earn 2 ThankYou® Points for each $1 spent at Restaurants; earn 1 ThankYou® Point for each $1 spent on All Other Purchases.
- No Annual Fee
Found this guide helpful? Bookmark it for future reference as you continue your financial journey!
Experian Boost: A Comprehensive Guide to Boosting Your Free Credit Score
FICO Credit Scores
A credit score is a number generally between 300-850, based on a statistical analysis of a person's credit files. This score represents the credit worthiness of a person. A credit score is assigned to each individual, to rate how risky a borrower he or she is--the higher the score, the less risk the individual poses to creditors. In most cases, your credit score will determine whether you will be approved for a credit card.
What is a Credit Score?
A credit score is a number generally between 300-850, based on a statistical analysis of a person's credit files. This score represents the credit worthiness of a person. A credit score is assigned to each individual, to rate how risky a borrower he or she is--the higher the score, the less risk the individual poses to creditors. In most cases, your credit score will determine whether you will be approved for a credit card.
Credit Score Facts
- Credit Scores range from 300-850, the higher the better.
- Most lenders base approval on your credit score.
- Higher Scores mean lower payments and better deals.
- Higher Scores mean Lower interest rates.
- Scores are determined by 5 main categories:
- Payment History
- Amounts Owed
- Length of Credit History
- Type of Credit Used
- New Credit
Note: Credit scores are used to represent the creditworthiness of a person and may be one indicator to the credit type you are eligible for. However, credit score alone does not guarantee or imply approval for any credit card product.
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