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The Pros and Cons of Balance Transfers

Posted on 2023-04-13 15:12:17 by iNF
Finance Balance transfers credit cards debt interest rates finance
The Pros and Cons of Balance Transfers

Balance transfers can seem like an attractive option for those struggling with credit card debt. By transferring a balance from a high-interest credit card to a new card with a lower interest rate, you can save money on finance charges and potentially pay off your debt sooner. However, it's important to weigh the advantages and disadvantages of balance transfers before making this move.

The Pros of Balance Transfers

One of the biggest benefits of a balance transfer is the potential to save money on interest charges. With a lower interest rate, more of your payments will go toward paying off the principal balance of your credit card debt, accelerating your progress. Additionally, some balance transfer cards may offer an introductory 0% APR period, allowing you to make payments without accruing any interest for a set period of time.

The Cons of Balance Transfers

On the other hand, there are also some potential drawbacks to balance transfers. Many balance transfer cards charge a balance transfer fee, which can be a percentage of the total amount transferred. Additionally, if you're unable to pay off your entire balance during the introductory period, your interest rate may jump up significantly, potentially negating any savings you had initially made. Finally, applying for a new credit card can also have a short-term negative impact on your credit score.

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