We don’t live in a world where everything is perfect and already paid for – the current month will end, and a new will begin, with new bills that are paid. You cannot avoid that, which means your expenditure can only be reduced so much – one has to feed, clothe, pay the mortgage, and a little shopping never hurt anyone. Well, except maybe your credit score. If we were living in a dream, none of these responsibilities would exist, but we live in the real world so better give you a reality check instead. Trust us; the knowledge will be better for you in the long run.
Your reason for carrying a credit card may be that you need emergency cash at times or that you like feeling secure. Whatever the reason is, or whatever the size of your credit card debt is – you can’t completely avoid it. The solution: Balance exchange.
But first, you need to understand what a balance transfer is and what it entails.
What is a Balance Transfer?
It’s a procedure through which you open a brand new credit card balance that has a comparatively low-interest rate. The next step is moving your existing high-interest rate balance to this new low-interest rate one.
What does that do, you might ask? Well, in the books, it means that you have just paid your old balance with a new card. After the burden of your old and heavier balance is shed from your life, you just make your life easier by transferring the amount to the low-interest credit card account – now you have the same amount of debt to pay back, only at a much lower interest rate.
There are a few cards that offer a good balance money transfer deal along with their purchases as well, but if you are in need of market-competitive interest rates, then you might need to get multiple cards. You will not be allowed to do a balance transfer within the same bank, so you might need to issue a credit card from another dealer to be able to do a successful balance transfer.
Things to remember when applying for a new card:
- Constantly transferring your credit from one card to another or applying for too many cards frequently will end up affecting your credit score – damaging your chance at successfully issuing a new card for a long time.
- Always compare before you choose the dealer you want to make the switch.
- Make the switch as soon as possible because the window during which you can make balance transfer between credit cards is very limited and you may end up losing your chance without really knowing.
- Balance Transfer Fee
Never, ever, forget about the fee. However, the rate can go up or down, but there is a very slim chance that you’ll be able to escape this detail. A balance transfer fee is an amount fixed by your host bank, and the amount you have to pay every month fluctuates depending on the amount of cash you move for the said duration. The rates are not flat, and you cannot postpone the payment as per your convenience because it is to be paid at the time you make the transfer or switch to the new card.
For example, your bank has a fixed percentage determined for your monthly balance transfer fee like 4% of your total balance transfer. Now, this seems like a minimal amount when you’re dealing with small transfers, but when it comes to much larger transfers, it can go in there the way of the possible cut you’re trying to make in the payback amount. The interest rate on the new card maybe 0%, but it can still charge a substantial amount of transfer fee.
Negotiate Your Way Out of the Balance Transfer Fee
First of all, don’t rely on the limited amount of information an individual bank has put up on their online portals regarding their balance relocate fee regulations – it’s different when you make a call or visit in person. Human contact is always more beneficial regarding negotiations. Why? You can have a conversation and have personal contact; it becomes easier to understand and get your point across to the other person.
But does that mean you can negotiate your way out of a balance transfer fee? It’s very possible.
- Ask them about all their available offers – in detail. If anything sounds incredibly appealing, hold the squeal. Poker-face the situation; that’s the first rule of successful negotiation. Never let the other person see your reaction or response unless you decide to say it out loud.
- Don’t go unprepared. Before you dial the company number or decide to visit, make sure that you have acquired information about them from every available source, so that you know before going in what you’re going in for.
- Keep up with the new trends in the industry regarding the balance transfer system.
- Once you’re sure that you’re prepared; go for it.
The How of Negotiating
You’re prepared; you know the deals and offers. The next step would be to start your negotiation in a conversational way. You will never reach a middle point if you don’t determine a starting point. Begin with a demand to give you a balance transfer fee-free offer. They are not going to agree with that, and that’s when your actual negotiation skills need to take effect.
When you start pointing out things that may work in your favor, like how you have had unwavering loyalty towards their bank and its services. Or if you have done well financially the previous year, point out how it benefitted the bank. If your card has been unused for a period, remember that the bank will want to get back in your good graces, so they would already be more flexible with their negotiations that they would be otherwise – they need you as much as you need them if not more. They will also try to keep the credit balance transfer negotiation as smooth as they possibly can.
They know that if you are not able to come to a conclusion that benefits both the parties, you may as well walk out to another dealer, in which case they get nothing at all. The banks need to avoid coming down to that situation. In a situation where they turn down your offer to waive the balance transfer fee entirely, try your best to have the amount capped in numbers and not percentages. For example, a reasonable amount would be $100 to $150, and you would only have to pay that much even when you’re making large balance transfers.
In an unlikely situation that they do not agree to provide you with an excellent balance transfer fee rate, you can make them an offer which would entail that they increase the interest rate in exchange for reducing or letting go of the balance transfer fee entirely. This plan works best if you have decided to repay the credit as soon as possible, in which case you won’t have to pay a higher interest for long.
If you’re new, the chances are that you may get the juiciest deals possible for the bank to offer. They will try their best to make their offer as attractive as possible to lure you in. If you find yourself in this situation, it’s very easy for you to take full advantage, and the negotiation becomes an automatically easy one without a doubt.
Don’t for a second fool yourself with the thought that if you have to make multiple transfers, you shall get bombarded with outrageous transfer fees. If you have agreed upon a flat and capped balance funds transfer fee, the quantity of transactions you make does not matter.
What is APR Balance Transfer?
The generic definition of APR is the Annual Percentage. However, it’s not that pure and straightforward. It’s a set percentage that will be applicable to the total unpaid balance of the credit card holder’s account. The charge is due if one fails to make the payment on the date. Most credit card companies demand an APR balance transfer fee of at least 3-4% of the total amount – which all depends on how daunting your monthly bill is.
Best 0% APR Cards with zero fee
Here are some credit cards that offer 0% interest fees and balance transfer fees. And here’s the good news: they all have 0% APR balance transfer fees as well.
How Do Balance Transfer Cards Work?
First of all, let’s talk about what a balance transfer card is. To attract new customers, banks frequently release fantastic credit transfer deals on their credit cards; especially during the post-festival seasons, because people are most likely to be in debt at the time due to all the holiday shopping and bringing.
But there are a few things you need to beware of:
- Even though the deals with 0% APR seem incredibly appealing, pay keen attention to detail. Their generous offer may only last for the “promotional” period. Or the honeymoon period, as most people call it.
- Before you apply for any credit card deals, make sure that you have carefully formulated a repayment plan for the year. Don’t forget to include the possibility of the increase in the interest rate from 0% to a little higher later when the promotional period ends. A poorly budgeted plan can cause you a bigger loss than a benefit at that point.
- Make sure that you remember the purpose of your newly issued credit card. Do not find yourself in the same pit you are actively trying to climb out of in the first place.
- Avoid making cash withdrawals with your credit card through the ATM. Why? Because the attractive deal you have been offered with the shiny new interest-free days does not apply to cash withdrawals, and you will be charged interest the second you insert your card in that machine.
Which Credit Cards Offer the Best Balance Transfer (0% Balance Transfer)
- Chase Slate
Best known for their 0% introductory balance transfer fee.
Chase Slate is famous for its initial offer which enables the user to be able to transfer a balance without 0% tax during the first 60 days of usage. This is the ONLY card service that offers a 0% APR policy for its first deals.
- Citi Simplicity Card
- Citi Diamond Preferred Card
Best known for the longest 0% APR period.
If you have acquired a Citi Simplicity Card for your balance transfer needs, it offers you a 21 month extended period of APR free transactions.
- Discover It – 18 Month Balance Transfer Offer
Best known for: the most attractive startup offers alongside 0% APR.
Discover it – 18 months Balance Transfer Offer presents its users with a 0% annual fee and 0% APR during the first six months of issuance of the card. Plus a 5% cashback on quarterly purchases that are $1,500, or over, and a 0% balance transfer fee for the first 18 months of using the service.
Why Calculate Balance Transfer?
This is an easy way to determine how much you will be able to save by making transfers with a particular card and then compare the results with the others. You own a credit card with an unpaid balance is the reason you have found yourself at this point in the first place. The last thing you can afford right now is a dicey deal with another bank which will just put the final nail in your coffin and earn you a not so comfy place in the score credit graveyard.
There are online calculators available to help you make comparisons. The details you will need to hold on to will include the details of your last credit card balance and the rate the new dealer is offering. These calculators will show you exactly how much you will be able to save on each of the cards, and you can then decide quickly and sensibly. Please bookmark this at www.creditcardblogworld.com