What is transfer apr

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Balance transfer credit cards can be a valuable tool if you need to pay off high-interest debt. But is it worth the cost? This app makes it east to borrow from friends and family at a low rate.

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Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. Please appreciate that there may be other options available to you than the products, providers or services covered by our service. Credit Card Finder. Balance Transfer Credit Cards. Kliment Dukovski. Updated Jan 12, Learn more about how we fact check.

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The requested balance transfer cannot exceed the available credit line, and balance-transfer fees count toward that limit. Although it's called a balance transfer, one credit card actually pays off another. The mechanics include:. The new card issuer or issuer of the card to which the balance is being transferred supplies the cardholder with checks.

The cardholder makes the check out to the card company they want to pay. Some credit card companies will let the cardholder make the check out to themselves, but make sure this will not be considered a cash advance. The cardholder gives the account information and amount to the credit card company to which they are transferring the balance and that company arranges the transfer of funds to pay off the account.

People who take advantage of these offers sometimes find themselves on the hook for unexpected interest charges. The problem is that transferring a balance means carrying a monthly balance. The grace period is the time between the end of the credit card billing cycle and the due date of the bill. During that period by law, at least 21 days but more often its 25 days a cardholder doesn't have to pay interest on new purchases.

But the grace period only applies if a cardholder is carrying no balance on the card. With no grace period, purchases on the new card after completing the balance transfer rack up interest charges. One good change: Since the Credit Card Accountability, Responsibility and Disclosure Act of , credit card companies can no longer apply payments to the lowest-interest balances first; they now have to apply them to the highest-interest balances first.

All the same, the Consumer Financial Protection Bureau says many card issuers don't make their terms clear in their promotional offers. Issuers are required to tell consumers how the grace period works in marketing materials, in application materials, and on account statements , among other communications.

The only way to get the grace period back on a credit card and stop paying interest is to pay off the entire balance transfer, as well as all new purchases. Balance transfers can also be done with an existing card, especially if the issuer is running a special promotion.

This can be tricky, however, if the existing card already has a balance that the transfer will only increase. Also consider what adding a big sum to a card will do to the credit utilization ratio —that is, the percentage of available credit that's been used—which is a key component of your credit score. You are using Some financial advisors feel credit card balance transfers make sense only if a cardholder can pay off all or most of the debt during the promotional rate period.

After that period ends, a cardholder is likely to face another high interest rate on their balance, in which case a personal loan—with rates that tend to be lower, or fixed, or both—is probably the cheaper option. If the personal loan has to be secured, however, the cardholder may not be comfortable pledging assets as collateral.

Credit card debt is unsecured, and in the event of default the card issuer can't come after cardholder assets. With a secured personal loan, the lender can take assets to recoup losses. Transferring a credit card balance should be a tool to escape debt faster and spend less money on interest without incurring charges or hurting your credit rating.

So long as you do your research, you shouldn't have any trouble finding the right balance transfer card for you. Consumer Financial Protection Bureau. Federal Trade Commission. Accessed July 29, Balance Transfer Cards. Building Credit. Credit Cards. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.