A ton of information continually circulates about an interest free balance transfer credit card but sorting through truths and untruths can be somewhat challenging. Therefore, we wanted to take this opportunity to provide facts about a credit card such as this, helping you determine if this would be the right solution for you or if another type of card would work better.
First, an interest free balance transfer credit card is a card that has 0% interest, but only for a specific amount of time known as the introduction or introductory period. Second, this type of card does not cost anything to transfer balances from other credit cards. These two things combined result in a unique credit card that could save you significant money but only if the card is from a reputable company and all the terms are clearly outlined and understood.
Of course, the balance transferred from the higher interest rate card to the interest free balance transfer credit card would still have to be paid off in full but the benefit is that during the period when no interest is charged, all of the money would go toward the principle. As the old card is closed, it would be reported as positive to the three reporting credit bureaus that it was paid off early and for the full amount. As long as the balance on the new card is aggressively paid, it too could be reported positively.
In most cases, financial institutions and credit card companies that offer an interest free balance transfer credit card are honest and reputable. These companies work hard to provide consumers with exceptional value that also benefits them. However, some companies use offers for a credit card such as this more as a teaser. This means they market the card in a way that encourages people to apply but important terms are carefully hidden that decrease the card’s value.
A great example would be a company offering an interest free balance transfer credit card in a way that makes it look like the perfect solution for everyone. Unfortunately, if you were to dig deeper, you would find the introductory period when no interest is charged is short, meaning you have little time to pay enough down on the balance to make a difference and warrant switching cards.
If you want an interest free balance transfer credit card to work for you, it is essential that the transferred balance be paid off as quickly as possible. If you were to make only minimum payments, the concept of 0% interest during the introductory period would be a wasted opportunity for getting out of debt.