Jasz
VIP Contributor
Balance transfer credit cards can be a useful tool for paying off debt, but they should be used with caution. When paying off debt with a balance transfer credit card, follow these steps:
- Assess Your Creditworthiness: Prior to applying for a balance transfer credit card, it is critical to check your credit score because good to excellent credit scores are typically required.
- Look for a card with a low interest rate or none at all: Look for a credit card that lets you transfer balances at low or no interest. You may be able to pay off your debt more quickly and save money on interest.
- Check the Fee for Transferring a Balance: The majority of balance transfer credit cards charge a fee, typically ranging from 3 to 5 percent of the transferred amount, to transfer a balance. When deciding whether a balance transfer credit card is right for you, be sure to account for this fee.
- Plan a repayment strategy: Create a repayment plan to pay off your debt before the zero or low interest rate period ends after you have transferred your balances to the new card. This may necessitate exceeding the monthly minimum payment.
- Stop Buying New Things: It is essential to avoid making new purchases with the balance transfer credit card because doing so can make it more difficult to pay off your debt.
- Stop using your old credit cards: Consider closing your previous credit card accounts after you have paid off the debt on the balance transfer credit card to avoid the temptation to add more debt.