What Is Balance Transfer Day, And What’s Its Impact on Credit Cards?
Following the recently conceived concept of “Bank Transfer Day” is a new, perhaps milder online credit card protest, referred to as “Balance Transfer Day.” The credit card protest movement declares its official intentions on its Facebook page: “We encourage debtors country-wide to unite and move their high-interest bearing credit card debt to a card with low APR as a sign of protest against high rates. Use the low balance transfer offer extended by credit card issuers as a tool to help pay down what is owed faster, because of low rate, and do it as a protest against high rates.”
Although this new credit card movement has been confirmed as related to a company that generates revenue from new credit card users, a balance transfer card can indeed be an outstanding option for saving you interest on your credit card debt. Fundamentally, a balance transfer card lets you consolidate your credit card debt from many credit cards to just one. Then, you’ll make one monthly payment, instead of several monthly high-interest credit card payments. However, before you make the move to a balance transfer credit card, consider several aspects of the scenario before proceeding.
You’ll need a decent credit score to acquire a balance transfer card, usually around 650-700.
If you close your other credit cards while receiving a balance transfer card, it’s possible to damage your credit score by shortening your credit history and decreasing your available credit, which may increase your credit card utilization rate. Balance transfer cards also come with an initial 0% rate on purchases, so resist the urge to spend on unnecessary things. If you make just one late payment on a balance transfer card, you could lose that 0% APR and pay interest.
Most balance transfer cards have a balance transfer fee – a percentage of the amount transferred. The fee can range from 3 to 5%, but it’s usually capped at around $80, so ensure you have funds available to pay the fee before applying for the balance transfer card.