What are the advantages of using a balance transfer credit card?

by lynn.runolfsdottir , in category: Personal Finance , a year ago

What are the advantages of using a balance transfer credit card?

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1 answer

by julius.brown , 10 months ago

@lynn.runolfsdottir 

There are several advantages to using a balance transfer credit card:

  1. Lower interest rates: One of the primary advantages of a balance transfer credit card is the opportunity to transfer high-interest credit card debt to a card with a lower interest rate. Many balance transfer cards offer promotional 0% APR periods, allowing you to pay off your debt without accruing interest during that time.
  2. Consolidation of debt: If you have multiple high-interest credit card balances, a balance transfer credit card allows you to consolidate them into a single card. This simplifies your debt management and can make it easier to track and pay off your balance.
  3. Savings on interest charges: By moving existing credit card debt to a balance transfer card with a lower interest rate, you can save money on interest charges. This can be especially beneficial if you have a large outstanding balance.
  4. Pay off debt faster: With the lower interest rates and potentially no interest during the promotional period, you can allocate more money towards paying off the principal of your debt. This can help you pay off your debt faster and become debt-free sooner.
  5. Improved credit score: By consolidating your credit card debt and making regular, on-time payments, you can improve your credit score over time. A higher credit score can help you secure better loan terms and interest rates in the future.
  6. Additional card perks and rewards: Some balance transfer credit cards offer additional perks such as cashback rewards, points, airline miles, or other benefits. These perks can add value to your card usage and further enhance the overall advantage of using a balance transfer credit card.


Note: It's important to consider any potential fees associated with balance transfers (such as transfer fees) and to read the fine print of your credit card agreement to fully understand its terms and conditions.