Transfer credit card balances is one way that cardholders with outstanding debt can help to reduce the overall interest that they pay each month.
In doing so, they can even reduce their credit utilization score by paying down more of the outstanding balance, and in turn, improve their credit score.
In this article, we’re going to share more about the process of transferring credit balances while also answering common questions we receive on the topic.
This article is part of our free series on US credit cards and US banking, including how to get a US credit card for foreign nationals, which you can access by clicking here right now.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Transfer Credit Card Balances
- What Are Balance Transfers?
- How to Make a Credit Card Balance Transfer?
- Is There a Benefit to Making a Credit Card Balance Transfer?
- Frequently Asked Questions
- Ready to Open Accounts With Banks in the USA?
Transfer Credit Card Balances
To transfer credit card balances, you will need to identify a new credit card issuer with a credit card balance transfer offer that you want to obtain. In most cases, very low-interest rates can be secured, including as low as 0%. Card issuers offer specific packages on “balance transfer cards” in order to attract high-balance customers to their cards, which is a profitable demographic for card issuers.
Before diving in any further, if you’re looking into other credit card options, such as a secured credit card in Canada, you can get started right now by clicking the link here.
Alternatively, if you’re looking to apply for your first card and are looking for the best credit cards for young adults, you also will have suitable options to choose from.
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What Are Balance Transfers?
Balance transfers refer to transferring debt from an existing credit provider to a new credit provider. The main catalyst for a balance transfer is that the new credit provider offers an attractive introductory interest rate, which can start at 0%. That said, not all balance transfer credit cards offer this amount. So, it’s important to confirm the terms and conditions of the credit provider before applying for a card.
Do Balance Transfers Have a Fee?
Yes, balance transfers do typically have a fee. However, the specific fee charged will depend on the credit card issuer that you are looking to transfer your balance to. Additionally, in certain instances, the fee may be a fixed rate or a percentage rate.
Not surprisingly, it is best to review the fees before applying to ensure that you know how much it will cost you to transfer your balance to the new card issuer. That said, for most individuals considering a balance transfer, the fee is nominal compared to the interest savings that they can usually capture.
Do Credit Card Balances Affect My Credit Score?
Yes, credit card balance does affect your credit score. In fact, the amount of debt that an individual has outstanding with lenders is one of the most important factors that can influence their credit score. As a result, it is generally suggested that maintaining a credit utilization score of no more than 30% is an effective way to maintain a good credit score while still being able to access credit.
How to Make a Credit Card Balance Transfer
To make a credit balance transfer, you will identify the specific card that you want to apply to, go through the application process, receive approval, and then your bank will be informed and the transfer will take place between the two credit card issuers.
Is There a Benefit to Making a Credit Card Balance Transfer?
Yes, there is a benefit to making a credit card balance transfer if you are carrying high-interest debt on existing credit cards. In fact, by obtaining a balance transfer, you will be able to move your existing balance. That said, reducing your monthly payments considerably is also a positive benefit, this includes paying down the principal balance on the card and reducing the amount of interest you will need to pay in the future.
Frequently Asked Questions
Below are four of the most common questions we receive from people looking into transferring credit card balances. If you have further questions you would like to ask our team, don’t hesitate to get in touch.
What Is the Best Balance Transfer Credit Card?
The best balance transfer credit card is the one that offers a guaranteed 0% interest rate for the longest time frame possible. However, not all cards offer a guaranteed rate, instead, they may qualify your rate after you have applied for a transfer with them.
Does It Look Bad to Do a Balance Transfer?
No, it does not look bad to do a balance transfer if you are concerned with the high interest that you are paying on your existing cards. A balance transfer is an effective way to manage your debt and allow you to pay more on the principal balance of any outstanding debt instead of contributing consistently to interest.
Is It Worth It to Get a Balance Transfer?
It is worth it to get a balance transfer credit card if you have high balances on existing credit cards. This is especially true if your cards are accumulating high-interest payments. This can provide a window of opportunity to pay down the principal instead of contributing to interest every month. That said, whenever possible, it is best to completely pay off your credit card. This is considered better as it completely eliminates the interest payments and the credit balance that you would otherwise be carrying.
What Are the Downsides of a Balance Transfer Credit Card?
The downsides of a balance transfer credit card depend on the issuer that you are applying for. For example, certain cards offer an initial rate of 0%, which can be very attractive. However, others offer a possible rate of 0% after assessment, which can only be determined after you apply for the card. So, if you don’t want a new credit pull on your credit report and want to avoid an unattractive interest rate, you should read the terms carefully.
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