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What is a balance transfer card?
A balance transfer card is a type of credit card that allows you to transfer your balance from a card, or multiple cards onto a new card. People usually take out balance transfer cards to take advantage of low – or even 0% promotional rates, which can help you clear your debt faster by paying less interest. They are also popular among people who have multiple balances and want to consolidate them so they only need to keep track of one monthly payment.
How is a balance transfer card different to other types of card?
Most credit cards are used to borrow money, at the point of sale, for goods and services – or to take out cash.
Balance transfer cards are specifically made for transferring a balance you already have onto a new card. You can still use a balance transfer card as a standard credit card – in that you can use it to pay for goods and services – or to take out cash. However, you won’t be able to transfer an existing balance onto a credit card that is not specifically a balance transfer card.
Why might I want a balance transfer card?
Typically, people take out a balance transfer card to consolidate their debt in one place. This means that you only need to keep track of one payment per month and should help you better manage your finances.
Balance transfer cards also often come with 0% introductory periods. This means that if you get a 0% introductory rate for 12 months, you have a whole year to pay down your principal balance without incurring any more interest.
Are they better than other types of credit cards?
Essentially, it depends on what you’re looking for. Balance transfer cards are unique in that their primary purpose is that they are a form of credit that people use to pay off credit they have already taken out.
We can’t really say what is a ‘better’ type of credit card, because that really depends on you and your circumstances. If you’re looking for a way to consolidate or pay down debt faster, then this is probably the right move for you, but keep in mind that just because you want a balance transfer card, does not mean that you’ll get one. You can check your chances of approval before you apply with Credit Karma, but as a general rule, if your score needs some work, you’ll probably have to increase it before you get accepted.