Lately, interest rates are climbing up and experts – who are analyzing the finance industry – believe that this trend is only going pick up speed in the near future. If you want to adopt a shrewd financial strategy to pay off your debts, then it is best to have a balance transfer with bad credit card if you have numerous revolving credit card balances.
With this card, you can pay your debt quicker with a single card that comes with an extremely low interest rate. For example, Capital One Balance Transfer and Wells Fargo Balance Transfer are both excellent programs. Hence, a greater chunk of your monthly payments eats up the principal amount and helps you close your debt in no time. In some of these balance transfer credit cards, you can even avail a 0% interest rate.
In addition to transferring your high interest credit card balances, it may make more sense for you to consider a personal loan. If you don’t qualify for a personal loan, try a lender that focuses on bad credit loans.
How to Transfer a Credit Card Balance?
By following these steps to the T, you can transfer a credit card balance with considerable ease.
1. Scan Your Wallet
To begin with, you should know which credit cards you possess, how much you owe, and what is the specified interest rate on your credit cards. To get these details, go through the Schumer Box – a monthly statement that is used to show a summary of credit card costs. You can transfer more than one balance to a new credit card. You can ease up the procedure by consolidating one or two balances.
2. Finalize a Suitable Balance Transfer With Bad Credit Card
When credit card issuers provide balance transfers, most of them are temporary. These transfers have a minimum period of six months, which can extend to 18 months at the most. Throughout this interval, the credit card company can raise the interest rates from 0% to 4% or more.
3. Review Fine Print
Review the terms and conditions on the fine print. It is absolutely critical to understand these terms and conditions in depth. You should know about the requirements for a balance transfer with bad credit, the introductory rate, the increase in the rate for late action, and the charges required for balance transfer. To make sure you don’t miss out, mark the date on your calendar on which the introductory interest rate terminates. In this way, you can prevent having a balance that comes up with a higher interest rate.
4. Apply for the Card
When you are done checking all the options, proceed by applying for a balance transfer with bad credit card. Keep in mind that you’ll need a decent credit score to qualify for the best deals. Similarly, you need a clean record that shows that you always paid bills on time. Pick credit cards without annual charges. Lastly, you must have an idea on how much are you expected to pay for the balance transfer charges.
5. Perform the Transfer
Luckily, you don’t have to make a bank trip for balance transfers. They can be completed online or via phone. Call your credit card company and ask them to perform the balance transfer with bad credit. Usually, this procedure is simple. However, if you need to transfer many accounts, collect all the information before you initiate the application procedure. Also, you will have to make another payment on the original card. This is necessary as the application for the new card requires takes a lot of days to finish.
6. Plan the Balance Payment
It is best to pay your entire debt before the introductory period ends. In case you benefit from the balance transfer introductory rate, bear in mind that it is a temporary rate that cannot extend to more than 18 months. A clever strategy that can help with improving credit scores and paying debts is budgeting. With this planning, you can pay the complete balance – one that you transfer – with the total amount of your monthly payments within that period. If you are not confident that you can go with this strategy, then try getting closer to it. Else, expect yourself to end up with an unmanageable balance and interest rate.
Managing Your Balance Transfer Credit Card in the Promotional Phase
1. Pay Quickly
Often, a company terminates the low APR when it identifies that a customer missed the payment deadline. Don’t think that one instance will be ignored. Some companies terminate low interest rates even after a single case of late payment. Read the agreement of your credit card. It contains conditions and rules that you are liable to follow for maintaining your promotional interest rate.
2. Avoid Frequent Use
Don’t burden yourself with additional debt. If more debt is added to your new balance transfer with bad credit card – that gets the transfer balance – or the older one, you are increasing the time required to pay off your debt. All credit cards come with their own conditions. In some cases, the low APR is only processed for the transferred amount. Thus, you have to pay higher interest rates for the new purchase. Likewise, monthly payments are only going to be processed for the new charges. Hence, this is certainly a possibility that at the end of your promotional phase, you may not have paid off the total amount, and you are now subjected to a higher interest rate.
3. Don’t Close the Card
Temptations occur just to get done with the paid-off credit card, preventing you from indulging in further purchases. If you do terminate a credit card account, this step may reduce your credit scores. This occurs because your action affects the credit utilization ratio and the length of your credit history. The credit utilization ratio goes on to calculate how much your total credit is available and how much of it have you used. For credit card companies, it is a useful benchmark to generate the credit scores of their customers.
Balance transfer with bad credit have a direct effect on the credit score. When you proceed with an application for credit, it is recorded. A lot of these inquiries in a short period may result in a battering of your credit scores.