If you’re looking to get a bit of relief from sky-high interest rate charges each month, one simple hack you can use is transferring your credit card balances from your higher interest rate cards to a lower interest rate card.
Of course, to begin, you need to have credit that is good enough to qualify for this kind of balance transfer. Credit card companies market these credit cards to people looking to transfer balances. They typically have 0% APR for balance transfer during a certain time period or other kinds of unique introductory offers.
How Does The Balance Transfer Process Work?
When applying for a balance transfer from one credit card to another, you will tell your credit card issuer which bank you are transferring your balances to and how much you want to transfer.
Once your credit card issuer approves you for this kind of balance transfer, the credit card issuer will pay your balance off with the other bank(s) using your new credit card. When that’s all said and done, you’ll have your debts transferred to your new card. Note that credit card issuers typically charge a 3-5% transfer fee as well.
Because the card you used for your balance transfer probably has a low interest rate that you got from a promotion or a 0% interest rate for a few months, you will get a bit of extra time to pay your debt off without having interest pile on, getting you back in the same situation you just escaped. For this reason, people who transfer their credit card balances are often able to pay off their debt much quicker.
Helping Your Credit Utilization
The cherry on top is that this credit card hack can benefit your credit utilization ratio, as you’re adding more available credit to your credit report profile by opening up a brand new credit card account.
The only major downside to this method is that it makes it possible to fall back into old, bad habits. People will see their new account with low interest as an opportunity to run up credit cards again, piling themselves even deeper into debt than necessary.
If having access to another credit card account might tempt you into spending more money than you have, it may be a better idea to try something else.
Final Thoughts – Becoming the Master of Your Credit
Beyond transferring your high interest rate credit card balances to a card with a low interest rate, there are many different routes you can take to improve your credit and financial situation. We recommend using authorized user tradelines from a reputable company if you want to improve your credit fast.
If you’re ready to take the first step towards building better credit, then make sure to get in touch with us here at Personal Tradelines! We look forward to helping you take your next steps in your financial life.