If you have fairly good credit, you’ll be inundated with offers for credit card balance transfers from numerous providers. Your current circumstance will determine if and when you accept any one of these offers.
Transferring debt from one card to another will help you save money if you do it properly. Balance transfers are especially beneficial if you’re moving the debt from a high interest card, to a card with a lower interest rate in order to pay the debt down. Balance transfers also provide the opportunity to give your credit score a boost.
Don’t look at these offers as a free ticket to spend more, or else you’ll increase your financial woes. Use the dos and don’ts provided below to carry out credit card balance transfers in the right way.
Do Evaluate Every Detail
Some people make the mistake of focusing only on the balance transfer credit card’s interest rates. In all actuality, they should closely examine every aspect of the deal. Look for balance transfer fees, the costs, and evaluate the annual fees on your old and new card.
The terms and conditions and credit limits are also factors you’ll need to consider. These are all things that should influence the decision you finally make. Calculate the costs and choose an option that least affects your wallet.
Do Check Comparison Sites
Comparison sites are a consumer’s paradise. It’s unfortunate that more consumers don’t make the most of them. These consumer centered sites save both money and time when it comes to finding the best deals online.
Top credit card comparison sites will let you search for cards in various categories, so you can get only the results you want. You can search by type of card, provider, interest rate, annual fees, reward types and more.
Limit the Number of Cards You Apply For
Just because you get numerous offers, it doesn’t mean that you should apply for all of them. Getting too many credit accounts at the same time and multiple inquiries on your credit will hurt your credit score.
According to some experts, one hard inquiry could reduce your score by as much as 35 points. The inquiry stays on your report for two years, but the good news is that it will only count against your credit for 12 months only. You can safely check your credit without hurting your score because this is considered a soft inquiry.
Keep Your Old Accounts Open
Closing down credit cards will not improve your credit. In fact closing down accounts after you transfer a balance will hurt your credit more than help it. When you close your old accounts, you’ll lose the benefits they provide in increasing your average age of all your credit accounts. Remember that a longstanding credit history counts favorably on your credit score.
Another way closing your account hurts your credit is that is affects your credit utilization rate. You’ll have less available credit, a higher credit usage ratio and ultimately a lower credit score.