32 Ways to Leave Your High-Interest Credit Card

credit card with high apr

Sure, there were the good times — back when you and your credit card first got together. Maybe your card was giving you a 0% introductory APR. Maybe you went everywhere together, bought everything together … but things changed. Today you feel like you’re giving a lot more than you’re getting, and now you’re wondering how you can leave your high-interest credit card behind.

While there aren’t as many options for leaving your credit card as there are ways to leave your lover (Paul Simon famously notes there must be 50 of those), it doesn’t mean you’re stuck. No, you’re probably not going to be able to slip out the back, Jack (that debt’s not going away even if you run!), but you most definitely can make a new plan, Stan. So don’t be coy, Roy, just listen to me …

1. Negotiate a Lower Rate

Most people don’t bother to ask their credit card issuer for a lower rate, but sometimes lowering your current APR can be as simple as that, so …

2. Don’t Be Afraid to Ask

Before you storm out on your credit card, try communicating. It could be worth your time to see if your card issuer will lower your interest rate, especially if your relationship is a long one. Keep in mind, they might pull your credit to see if you’re deserving of a lower APR. That’s why you’ll want to …

3. Check Your Credit Score …

You’ll want to get an idea of whether you’re likely to qualify for a lower APR, lest you incur a hard inquiry on your credit report only to get rejected. (You can view two of your free credit scores, along with some recommendations for credit cards it could help you qualify for, on Credit.com.)

4. … Fix it Up Before Inquiring

If your scores are less than stellar, you may want to try brushing them up before you call up your issuer. You can find 11 ways to improve your credit here.

5. Do Some Research

Are there other cards out there you qualify for that can offer you a better APR? If so, you can use this information to your advantage while negotiating with your current issuer.

6. Begin Negotiating With Your Oldest Card

Like we said before, your issuer might be willing to work with you, especially if you’ve been a cardholder for several years, so start negotiating with whichever card issuer you’ve been with longest to see if you can reduce your interest rate there.

7. Keep It Simple

It’s not a difficult process to ask for a decrease in your APR. In fact, it’s as simple as a call to the customer service line listed on the back of your card. Yes, they could say no, but that’s where your research will come in handy and you can …

8. Leverage Your Loyalty

If they say they can’t reduce your rate, remind them of how long you’ve been with the company, how you’ve never had a late payment or maxed out your card’s balance. Whatever positives you can cite can be helpful. If that doesn’t work, tell them what the other cards you’ve researched are offering. But most importantly …

9. Don’t Give Up Right Away

The old adage “if at first you don’t succeed, try, try again” is especially important here. Your issuer may say no, but that doesn’t mean you should give up. Call them multiple times, and ask to speak to a supervisor if their answer continues to be no. Of course, you’ll want to be polite throughout the process. If all of this doesn’t work, it’s time to …

10. Consider an Upgrade

A lot of card issuers have tiered credit card offerings, so you could potentially upgrade to a new card with the same issuer that offers a lower interest rate and transfer your current balance to that card.

11. Keep Watching Your Credit …

Just like when an issuer considers lowering your interest rate, which we mentioned above, they’ll likely check your credit as part of your application for a card upgrade. So, if you think there’s a better credit card available elsewhere, you might not want to ask them to upgrade you.

12. … & Limit Your Card Applications

In fact, every time you apply for new credit you’re going to have a hard inquiry and a ding to your credit scores. These can add up if you have too many in a short span of time and even impact your ability to qualify for a new card, so be very selective or you could end up hurting your credit. (You can read here about how often you can apply for new credit without hurting your credit scores too much.)

If you’ve tried all these steps with your current credit card issuer to no avail, it’s time to look at starting a new relationship with a new issuer.

13. Get a Balance Transfer Card

Let’s say you’ve tried everything to lower your current APR with your card issuer and they just won’t work with you. Perhaps you’ve had some late payments or you just haven’t been with them that long. Getting a balance transfer credit card could make sense for you.

14. Find an Introductory 0% APR

There are lots of options to choose from in the world of balance transfer credit cards with a low or even 0% introductory APR. Here’s how to find the right one for you …

15. Comparison Shop

You can start by checking out some of the best balance transfer credit cards and comparing what they offer.

16. Give Yourself Plenty of Time

There are balance transfer cards that offer as long as 21 months at 0% financing for balance transfers and even new purchases. If you have a lot of current credit card debt, that could be very beneficial to you, as you’ll eliminate your interest while paying down your principal.

17. Don’t Forget the Transfer Fees …

Of course, most balance transfer cards charge you a fee for transferring your balance – typically 3% to 5%, so be sure to compare those amounts as well.

18. … & the Annual Fees

Some cards also charge an annual fee, so you’ll want to consider that cost as well as you compare balance transfer offers.

19. Make Sure You Time it Right

If you’re looking at buying a new house, car or other major purchase anytime soon, you’ll want to time your credit card application with that in mind since your credit scores will be impacted by that aforementioned hard inquiry that takes place during your application process.

20. Include Your Balance Transfer Amount in Your Application

This can help ensure the transfer goes smoothly and quickly. The new issuer will reach out to your current card issuer once you’re approved and get the transfer process started right away, saving you the hassle of doing it later.

21. Pay Off Your Balance

Once you have your new balance transfer card, it’s important to focus your attention on getting that balance paid off before your introductory rate expires. Otherwise, your balance is going to revert to the standard variable rate.

22. Keep Your Old Card

No, keeping your old card isn’t exactly leaving it, but hear us out. You might be tempted to close your old card, particularly if your card issuer refused to reduce your APR when you transferred your balance, but keeping it open can be good for your credit score.

That’s because your credit scores improve the longer you have a credit account in good standing, so if you had a decent payment history, keeping that card open could really help. Moreover, your total credit line will be higher if you keep it open, also helping your scores. (You can find a full explainer on how closing a card can affect your credit here.)

Go ahead and cut it up, though, if it makes you feel better. That will also keep you from using it.

23. Keep Your New Interest Rate Low

Now that you have a card with a lower APR, even if it’s just an introductory rate, there are things you can do to keep your rate as low as possible. You’ll want to …

24. Make Your Payments On Time …

Late payments can send your APR soaring, so make all of your payments on time to avoid a penalty APR.

25. … & Keep Your Balance Low

If you can’t pay off your balance each month, at least try to make payments that keep your balance below 30% of your credit limit, though below 10% is even better if you want to do your credit scores a real favor.

26. Don’t Take Cash Advances

These usually come with a higher variable APR than purchases or balance transfers, so try to avoid them if you want to keep your rates down.

27. Try Some Other Alternatives …

If you’ve had a bad run financially and aren’t going to qualify for a credit card with a lower APR, you still have plenty of money-saving options, so don’t give up just yet. You have some alternatives …

28. Like a Personal Loan …

You may be able to pay off your credit card debt with a personal loan from your bank or credit union, but keep in mind that unless you have excellent credit, you’ll likely need some kind of collateral to secure it. Be sure to ask about the lender’s credit requirements before applying.

29. Or a Home Equity Line of Credit …

If you own a home and have some equity built up, this can be a great option for paying off debt at a lower interest rate. You can save a ton by moving your debt to a HELOC.

30. … But Don’t Spend Your Savings

Use the money you save by refinancing through a HELOC on creating an emergency fund (if you don’t already have one). Once that’s set up, you can use the money as prepayment against your home loan or to boost your retirement savings.

31. Consider a Debt Management Plan …

A debt management plan allows you to turn over all of your debt information to a credit counseling agency. You make one monthly payment to them, and they pay your credit cards and other debts for you. These plans usually last three to five years, and a lot of lenders lower your interest rates when you participate in such a plan. You’ll want to be sure to find a reputable credit counseling agency, so do your research.

32. … Or File for Bankruptcy

As a last-resort option, you can consider getting out from under your high-interest credit card debt by declaring bankruptcy. You’ll lower your debt and have many years to pay it off depending on the type of bankruptcy relief you file for. Just remember you’ll also have a major blemish on your credit reports for up to 10 years that could seriously affect your ability to get credit (in general and at n affordable rate) during that time. Still, if your debt is significant, this could be the right option for you. Talking to a credit counselor or bankruptcy attorney before deciding could help you make the right choice for your circumstances.

Have another question about credit card debt? Leave it in the comments section and one of our credit experts will try to get back to you.

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The post 32 Ways to Leave Your High-Interest Credit Card appeared first on Credit.com.

9 Best 0% APR Credit Card Offers – March 2017

There are a lot of 0% APR credit card deals in your mailbox and online, but most of them slap you with a 3 to 4% fee just to make a transfer, and that can seriously eat into your savings.

At MagnifyMoney we like to find deals no one else is showing, and we’ve searched hundreds of balance transfer credit card offers to find the banks and credit unions that ANYONE CAN JOIN which offer great 0% interest credit card deals AND no balance transfer fees. We’ve hand-picked them here.

If one 0% APR credit card doesn’t give you a big enough credit line you can try another bank or credit union for the rest of your debt. With several no fee options it’s not hard to avoid transfer fees even if you have a large balance to deal with.

1. Chase Slate® – 0% Introductory APR for 15 months, $0 Introductory Balance Transfer FEE

ChaseSlateScreenThis deal is easy to find – Chase is one of the biggest banks and makes this credit card deal well known. Save with a $0 introductory balance transfer fee, 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee. Plus, receive your Monthly FICO® Score for free.

You can get this offer if you complete the balance transfer within 60 days of opening the account. So it’s worth a shot to see how big of a credit line you get. If it’s not enough, move on to the other options below.

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2. Barclaycard Ring™ MasterCard® – 0% Introductory APR for 15 months, $0 Introductory Balance Transfer FEE

This card is available if you have excellent credit. Be aware that you have 45 days to complete this transfer after opening the account.

You can also nominate and vote on charity partners to donate card profits each year and there are no foreign transaction fees if you use the card abroad.

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Tip: The remaining no fee cards on this list are deals for 12 months or less. You might be better off paying a standard 3% fee for a longer deal, like 0% for 18 months from the Discover It, one of the better deals with a fee of 3% or less.

3. Alliant Credit Union Credit Cards – 0% APR for 12 months, NO FEE

Alliant is an easy credit union to work with because you don’t have to be a Alliant Visa Platinum Credit Cardsmember to apply and find out if you qualify for the 0% APR deal.

Just choose ‘not a member’ when you apply and if you are approved you’ll then be able to become a member of the credit union to finish opening your account.

Alliant Credit Union

Anyone can become a member of Alliant by making a $10 donation to Foster Care to Success.

If your credit isn’t great, you might not get a 0% rate – rates for transfers are as high as 5.99%, so make sure you double check the rate you receive before opening the account, and they might ask for additional documents like your pay stubs to verify the information on your application.

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4. Edward Jones World MasterCard – 0% APR for 12 months, NO FEE

edwardjonesYou’ll need to go to an Edward Jones branch to open up an account first if you want this deal. Edward Jones is an investment advisory company, so they’ll want to have a conversation about your retirement needs.

But you don’t need to have money in stocks to be a customer of Edward Jones and try to get this card. Just beware that you only have 30 days to complete your transfer to lock in the 0% rate. This deal expires 5/5/2017.

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5. First Tech Choice Rewards – 0% APR for 12 months, NO FEE

firsttechrewardsAnyone can join First Tech Federal Credit Union by becoming a member of the Financial Fitness Association for $8, or the Computer History Museum for $15. You can apply for the card without joining first. This introductory 0% for 12 months on balance transfers with no fee deal is for the First Tech Choice Rewards World MasterCard, and you also get 10,000 points for opening the card (no spending required). The points don’t expire as long as you have the card, and 6,000 points is enough for $50 cash back, while 11,000 points is enough for $100 cash back, which can help you pay down your card.

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6. La Capitol Federal Credit Union – 0% APR for 12 months, NO FEE

La Capitol Federal Credit UnionAnyone can join La Capitol Federal Credit Union by becoming a member of the Louisiana Association for Personal Financial Achievement, which costs $20. Just indicate that’s how you want to be eligible when you apply for the card – no need to join before you apply. And La Capitol accepts members from all across the country, so you don’t have to live in Louisiana to take advantage of this deal on the Prime Plus card.

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7. Quorum Federal Credit Union – 0% APR for 12 months, NO FEE

Quorum Federal Credit UnionQuorum is a New York based credit union anyone can join by joining the Select Savers Club during the application process – just choose ”I would like to join through an association” on the application page. All of Quorum’s credit cards offer the 0% for 12 months with no fee deal.

Just be aware the 12 months starts from when your account opens, not when you make the transfer, so if you wait a month to do the transfer, you’ll only get the zero deal for 11 months.

And the 0% deal isn’t prominent on the Quorum site, you’ll see it buried in the fine print. Look for the sentence “The introductory purchase and balance transfer APR is 0% for 12 months from account opening and applies to ALL Quorum MasterCard credit cards” at the very bottom of their page.

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8. Purdue Federal Credit Union – 0% APR for 12 months, NO FEE

purdue-credit-union-visaThe Purdue Federal Credit Union doesn’t have open membership, but one way to be eligible for credit union membership is to join the Purdue University Alumni Association as a Friend of the University. Anyone can join the association, but it costs $50. The minimum credit line on the Visa Signature card offering 0% is $5,000, so if approved the $50 would be like a transfer fee of 1% or less. The good news is you can apply and get a decision before you become a member of the Alumni Association.

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9. Fort Knox Federal Credit Union – 0% APR for 12 months, NO FEE

This deal is only good for transfers made before March 31, 2017, so make sure you apply for the card with enough time to be able to get the transfer done. The offer is available on all Fort Knox Visa cards, except the student card. This includes the ‘Classic’ Visa which may be available to you with less than perfect credit, though limits on that card are $5,000 or less.

Anyone can join Fort Knox Federal Credit by joining the American Consumer Council for $5. Click on ‘balance transfer’ after you follow the link below to see the details.

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10. Logix Credit Union Credit Card – 0% APR for 12 months , NO FEE

If you live in AZ, CA, DC, MA, MD, ME, NH, NV, or VA you can join Logix Credit Union and apply for this deal. Some applicants have reported credit lines of $15,000 or more for balance transfers, so if you have excellent credit, good income, but a large amount to pay off (like a home equity line), this could be a good option.

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11. First Tennessee Bank Credit Card – 0% APR for 12 months, NO FEE

If you want to apply online for this deal, you’ll need to live in a state where First Tennessee Bank Credit CardFirst Tennessee has a branch though. Those states are: Tennessee, Florida, Georgia, Mississippi, North Carolina, and South Carolina.

You need to have an existing First Tennessee account to apply online, but if you don’t have one, you can print out an application and mail it into their office to get a decision. You’ll find a link to the paper application when the online form asks you whether you have an account or not.

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12. Andigo Credit Union – 0% APR for 6 months, NO FEE

You’ll have a choice to apply for the Andigo Visa Platinum, Platinum Rewards, or Platinum Cash Back. The Platinum without rewards has a lower ongoing APR, starting as low as 10.15%, compared to 12.15% for the Platinum Rewards card, so if you’re not sure you’ll pay it all off in 6 months the Platinum without rewards is a better bet.

Anyone can join Andigo by making a donation to Connect Vets for $15, and you can submit an application for the card without being a member yet.

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13. Aspire Credit Union Credit Card – 0% APR for 6 months, NO FEE

You don’t have to be a member to apply and get a decision from Aspire. Once youAspire Credit Union Credit Card do, Aspire is easy to join – just check that you want to join the American Consumer Council (free) while filling out your membership application online.

Make sure you apply for the regular ‘Platinum’ card, and not the ‘Platinum Rewards’ card, which doesn’t offer the introductory deal. Aspire says people with fair credit can apply for its card.

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14. Elements Financial Credit Card – 0% APR for 6 months, NO FEE

Elements Financial Credit CardTo become a member and apply, you’ll just need to join TruDirection, a financial literacy organization. It costs just $5 and you can join as part of the application process.

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15. Justice Federal Credit Union – 0% APR for 6 months, NO FEE

Justice Federal Credit UnionIf you’re not a Department of Justice, Homeland Security, or U.S. court employee (or a few others), you need to join a law enforcement organization to be a member of Justice Federal. One of the eligible associations for membership is the National Native American Law Enforcement Association. It costs $15 to join.

You can apply as a non-member online to get a decision before joining. And Justice is unique in that its Student credit card is also eligible for the 0% no fee deal, so if your credit history is limited and you’re trying to deal with a balance on your very first card, this could be an option.

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16. Xcel Platinum Visa – 0% APR for 6 months, NO FEE

Xcel Platinum Visa credit cardAnyone can join Xcel by becoming a member of the American Consumer Council, and you can apply for the card as a non-member of the credit union, but not everyone who is approved for the card will get the low intro rate. Xcel advises you contact them to get as sense of whether your income, credit history, and employment history will qualify for the intro rate.

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Are these the best deals for you?

If you can pay off your debt within the 0% period, then yes, a no fee 0% balance transfer credit card is your absolute best bet. And if you can’t, you can hope that other 0% deals will be around to switch again.

But if you’re unsure, you might want to consider…

  • A deal that has a longer period before the rate goes up. In that case, a balance transfer fee could be worth it to lock in a 0% rate for longer.
  • Or, a card with a rate a little above 0% that could lock you into a low rate even longer.

The good news is we can figure it out for you.

Our handy, free balance transfer tool lets you input how much debt you have, and how much of a monthly payment you can afford. It will run the numbers to show you which offers will save you the most for the longest period of time.

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The savings from just one balance transfer can be substantial.

Let’s say you have $5,000 in credit card debt, you’re paying 18% in interest, and can afford to pay $200 a month on it. Here’s what you can save with a 0% deal:

  • 18%: It will take 32 months to pay off, with $1,312 in interest paid.
  • 0% for 12 months: You’ll pay it off in 28 months, with just $502 in interest, saving you $810 in cash. That even assumes your rate goes back up to 18% after 12 months!

But your rate doesn’t have to go up after 12 months. If you pay everything on time and maintain good credit, there’s a great chance you’ll be able to shop around and find another bank willing to offer you 0% interest again, letting you pay it off even faster.

Before you do any balance transfer though, make sure you follow these 6 golden rules of balance transfer success:

  • Never use the card for spending. You are only ready to do a balance transfer once you’ve gotten your budget in order and are no longer spending more than you earn. This card should never be used for new purchases, as it’s possible you’ll get charged a higher rate on those purchases.
  • Have a plan for the end of the promotional period. Make sure you set a reminder on your phone calendar about a month or so before your promotional period ends so you can shop around for a low rate from another bank.
  • Don’t try to transfer debt between two cards of the same bank. It won’t work. Balance transfer deals are meant to ‘steal’ your balance from a competing bank, not lower your rate from the same bank. So if you have a Chase Freedom with a high rate, don’t apply for another Chase card like a Chase Slate and expect you can transfer the balance. Apply for one from another bank.
  • Get that transfer done within 60 days. Otherwise your promotional deal may expire unused.
  • Never use a card at an ATM. You should never use the card for spending, and getting cash is incredibly expensive. Just don’t do it with this or any credit card.
  • Always pay on time. If you pay more than 30 days late your credit will be hurt, your rate may go up, and you may find it harder to find good deals in the future. Only do balance transfers if you’re ready to pay at least the minimum due on time, every time.

The post 9 Best 0% APR Credit Card Offers – March 2017 appeared first on MagnifyMoney.

The Fastest Way to Pay Off $10,000 in Credit Card Debt

Before you read on, click here to download our FREE guide to become debt free forever! 

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Digging out of the debt hole can feel frustrating, intimidating and ultimately impossible. Fortunately, it doesn’t have to be any of those things if you learn how to take control.

Paying down debt is not only about finding the right financial tools, but also the right psychological ones. You need to understand why you got into debt in the first place. Perhaps it was a medical emergency or a home repair that needed to be taken care of immediately. Maybe you’d already drained your emergency fund on one piece of bad luck when misfortune struck again. Or maybe you’re struggling with a compulsive shopping problem, so paying down debt will likely result in you accumulating more until the addiction is addressed.

Understanding the why and how of your debt isn’t the only reason psychology plays a role in how you should create your debt attack plan.

You also need to understand what motivates you to succeed. Do you want to pay down your debt in the absolute fastest amount of time possible that will save more money or do you want to take some little wins along the way to keep yourself motivated?

The common terms for these debt repayment strategies are:

  • Debt avalanche: starting with the highest interest rate and working your way down, which saves both time and money.
  • Debt snowball: paying off small debts first to get the warm and fuzzies that will motivate you to keep going.

Whichever version you pick needs to set you up to be successful in your debt repayment strategy. Now it’s time to find the proper tools to help you dump that debt for good.

The first step in crafting a debt repayment strategy is to understand what you’re eligible to use. Your credit score will play a big role in whether or not you’ll qualify for products like balance transfers or competitive personal loan offers.

A credit score of less than 600 will make it difficult for you to qualify for a personal loan and will eliminate you from taking on a balance transfer offer.

If you have a credit score above 600, you have a good chance of qualifying for a personal loan at a much lower interest rate than your credit card debt. With new internet-only personal loan companies, you can shop for loans without hurting your score. Use this tool to see if you can get approved for a loan without hurting your score. Click here to get rates from multiple lenders in just a few minutes, without a credit inquiry hurting your score. For people with the best scores, rates start as low as 4.80%.

If you have a score above 700, you could also qualify for 0% balance transfer offers.

[Click here if you’re looking to rebuild your credit score.]

Not sure what your credit score is? Click here to learn how to find out.

Now let’s talk about the financial tools to add into your debt repayment strategy in order to dig out of the hole.

Let’s say you have $10,000 in credit card debt, and are stuck paying 18% interest on it.

You already know that putting as much spare cash as you can toward paying down your debt is the most important thing to do. But once you’ve done that, so what’s next?

Use your good credit to make banks compete and cut your rates

MagnifyMoney’s Paying Down Debt Guide has easy to follow tips on how to put banks to work for you and get your rates cut.

You could save $1,800 a year in interest and lower your monthly payments based on several of the rates available today. That means you could pay it off almost 20% faster.

Here’s how it works.

Option One: Use a Balance Transfer (or Multiple Balance Transfers)

If you trust yourself to open a new credit card but not spend on it, consider a balance transfer. You may be able to cut your rate with a long 0% intro APR. You need to have a good credit score, and you might not get approved for the full amount that you want to transfer.

Your own bank might not give you a lower rate (or only drop it by a few percent), but there are lots of competing banks that may want to steal the business and give you a better rate.

Our favorite offer is Chase Slate®. You can save with a $0 introductory balance transfer fee, 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee. Plus, receive your Monthly FICO® Score for free.

Chase Slate Credit Card

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If you don’t think Chase is for you, consider Discover, which offers an intro 0% APR for 21 months (with a 3% balance transfer fee). MagnifyMoney keeps the most complete list of the longest and lowest rate deals available right now, including deals with no fees. Just answer a few questions about how your debt and much you can afford to pay, and you’ll get a personal list of the deals that will save you the most.

promo-balancetransfer-halfIt also has six tips to make sure you do a balance transfer safely. If you follow them you’ll save thousands on your debt by beating the banks at their game.

You might be scared of a balance transfer, but there is no faster way to cut your interest payments than taking advantage of the best 0% or low interest deals banks are offering.

Thanks to recent laws, balance transfers aren’t as sneaky as they used to be, and friendlier for helping you cut your debt.

Sometimes the first bank you deal with won’t give you a big enough credit line to handle all your credit card debt. Maybe you’ll get a $5,000 credit line for a 0% deal, but have $10,000 in debt. That’s okay. In that case, apply for the next best balance transfer deal you see. MagnifyMoney’s list of deals makes it easy to sort them.

Banks are okay with you shopping around for more than one deal.

 

Option Two: Personal Loan

If you never want to see another credit card again, you should consider a personal loan. You can get prequalified without hurting your credit score, and find the best deal to pay off your debt faster. With just one application, you can get multiple loan offers with rates as low as 4.77% here.

Personal loan rates are often about 10-20%, but can sometimes be as low as 5-6% if you have very good credit.

Moving from 18% interest on a credit card to 10% on a personal loan is a good deal for you. You’ll also get one set monthly payment, and pay off the whole thing in 3 to 5 years.

Sometimes this may mean a higher monthly payment than you’re used to, but you’re better off putting your cash toward a higher payment with a lower rate.

And you’ll get out of debt months or years faster by leaving more money to pay down the debt itself.

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Apply Now

The post The Fastest Way to Pay Off $10,000 in Credit Card Debt appeared first on MagnifyMoney.

Can a Balance Transfer Hurt Your Credit Score?

 

When you are carrying a balance on a high-interest credit card, receiving a 0% balance transfer offer can be enticing. After all, shifting the balance from a high-interest credit card to a no-interest card means saving money on interest and paying down the balance faster.

But how will the balance transfer impact your credit score?

First, you should understand three crucial elements that go into determining your credit score: inquiries, credit utilization, and length of credit history.

  • Inquiries – How many new accounts have you opened lately? Whenever you apply for new debt, the lender performs a “hard inquiry” to determine whether they will approve your application. According to FICO, hard inquiries account for about 10% of your credit score.
  • Credit utilization ratio – How much do you owe? Your credit utilization ratio is calculated based on your total outstanding balances compared to your total credit limit. It is calculated both per card and across all of your credit accounts and makes up about 30% of your credit score.
  • Length of credit history – How long have you been using credit? This factor looks at the age of your oldest account as well as the average length of all of your credit accounts. The longer your history, the higher your score. According to FICO, the length of your credit history accounts for about 15% of your credit score.

How balance transfers can hurt your credit score

Balance transfer applications count as a hard credit inquiry

When you open a new account for a balance transfer, the lender will perform a hard inquiry. One hard inquiry is unlikely to have a large impact on your credit score. If you have excellent credit and haven’t applied for a card in the last six months, one hard inquiry may not impact your score at all. Inquiries could have as much as a ten-point impact, but that would be very rare. The typical impact of one hard inquiry is about five points. However, if you apply for several cards at once, the applications could have a big impact.

Balance transfers lower the average length of your credit history

Opening a new credit account will lower the average age of your credit accounts, which can negatively impact your credit score in the short term.

For example, if you have one 5-year-old credit card, one 3-year-old credit card, and one 10-year-old credit card, the average age of your cards is 6 years.

When you open a new credit card for a balance transfer, you now add a less-than-one-year-old account to your balance. At the most, your average credit age will drop down to 4.75 years.

How balance transfers can improve your credit score

All in all, the benefits of balance transfers can far outweigh the negatives.

You will likely lower your utilization rate

Opening new credit accounts decreases your overall credit utilization ratio, which positively affects your credit score over time. For example, if you have one credit card with a $5,000 limit and a $2,500 balance, your credit utilization ratio is 50%. When you open a second account with a $5,000 limit and transfer the $2,500 balance to the new card while leaving the old account open, your total available credit is $10,000 ($5,000 + $5,000), and your outstanding balance is still just $2,500. You’ve reduced your credit utilization rate to 25%.

What happens if the new account’s limit is just $2,500 and you transfer the full $2,500 balance? You’ve still reduced your overall credit utilization ratio. Now you’re using 33% of your available credit ($2,500 / $7,500). However, the negative is that there are still some points taken away if you max out one card. You didn’t have any maxed out cards before, and now you do. Credit scores are very sensitive to people who max out their credit cards as they’re seen as high risk. Maxing out a new card could reduce your credit score by about 30 points in the short term.

You will be paying off debt faster, improving your score dramatically

Where balance transfers get exciting is that more of your money is going to paying off the balance of your debt as opposed to interest. Ultimately, the best credit score comes from carrying as little debt as possible.

Using our previous example of the $2,500 balance on one card, assume that card had a 21% interest rate and you could afford to pay $220 per month toward paying it off. According to MagnifyMoney’s balance transfer calculator, if you did not take advantage of a balance transfer, the card would be paid off in 13 months, and you would pay $309 in interest. If you transferred that balance, even with a 3% balance transfer fee ($75), you could pay off that balance one month sooner and save $234.

In the end, your goal should be to pay off your debt as quickly as possible. Over the course of a year, as long as you stick to your strategy, you can eliminate that debt in a year, and your score will go up a whole lot faster than it otherwise would.

When to avoid balance transfers

The short-term impact of a balance transfer on your credit score should only concern you if you are planning on applying for a mortgage in the next six to nine months. During this period, every point on your score counts. Just a 0.2% difference in your interest rate can cost a ton of money over the life of your mortgage. In that case, wait until after you get the mortgage to do the balance transfer.

The bottom line

People are so programmed to think about their score that they sometimes lose sight of what they want the high score for. A higher score saves you money and gets you out of debt faster. Don’t focus on short-term fluctuations of 10 to 20 points. Use your good credit score to save money. That’s what it’s there for.

The post Can a Balance Transfer Hurt Your Credit Score? appeared first on MagnifyMoney.

Looking for a Balance Transfer Credit Card? Here’s 5 Things to Know

If you're looking for a balance transfer credit card, here are some things to keep in mind.

If you have found yourself dealing with high amounts of credit card debt, you might be feeling a little trapped. At times, it can seem like you are never going to get to the other side and become debt-free again. However, there are tools to use that can help you with your goals. One of the best ones is a balance transfer credit card.

A balance transfer credit card is exactly what it sounds like. It allows you to transfer a balance from one card to another. Typically this is done so that you can have a lower interest rate on your balance or take advantage of a short-term 0% introductory offer on transferred balances. However, before you make the decision to use a balance transfer credit card, consider these five facets.

1. Yes, Balance Transfers Can Save You Money

In fact, one of the biggest reasons why you should consider a balance transfer credit card is because of the money you could save. The higher your balance, the more money that could end up back in your pocket. To help give you a visual, let’s assume that you have a credit card balance of $10,000 and your current card has an annual percentage rate (APR) of 14%.

Now let’s assume that you make the decision to move your balance to a Chase Slate card (see full review here). With this card you would avoid paying a balance transfer fee, so long as you transfer that balance in the first 60 days of opening the account. (After that, you’ll pay a 5% balance transfer fee.) Plus, you would receive an introductory 0% APR for the first 15 months. If you were to make a $200 payment each month and received a 13.24% go-to APR, the lowest end of the Slate’s 13.24% to 23.24% variable APR range, you would be saving $3,200 in interest by the time the balance was paid off.

2. Transferring a Balance Isn’t the Same as Repaying Your Debt

Balance transfers can be extremely useful, but, keep in mind, they are not a replacement for repayment. When you complete a balance transfer, you are paying off one credit card with another. The only way that this works in your favor is if you repay the entire debt at a lower interest rate. Once you complete your balance transfer, come up with a plan to start eliminating the debt altogether. If possible, do it before that introductory 0% APR is over. If not, get your balance as low as possible before the go-to rate kicks in.

3. Be Aware of the Fee

The Chase Slate card is an exception when it comes to fees. Most other balance transfer credit cards will charge a fee of 2% to 3% when you go to transfer a balance, but some are as high as 5%. Before you make the decision to use a balance transfer card, you should crunch the numbers to make sure your savings on interest will justify the fee. You can learn more about the best balance transfer credit cards here.

4. Your Credit Score Might Drop … Briefly

Every time you apply for a new credit card, the issuer will run a credit pull — which generates a hard inquiry on your credit report. They do this to make sure you are a suitable borrower for the product you are applying for. Because of this inquiry, your credit score could decrease by a small amount. This should be a short-lived effect, however, so long as you don’t add to your debt. In fact, in the long-term, the new credit card could help your credit score, since that new credit limit will likely bolster your credit utilization — how much credit you have versus your total available credit. (Of course, this is predicated on you not running balances back up on both cards.)

5. Not Everyone Will Qualify for a Balance Transfer Credit Card

Even though you might want to complete a balance transfer, and it might be the best thing for your debt repayment plan, not everyone will be eligible. The best offers, in fact, will require applicants to have a good or excellent credit score to be approved. You can see where your credit stands by viewing two of your credit scores, updated every 14 days, for free on Credit.com. And, if you’re looking to improve your standing, you can find some ways to give your credit score a jumpstart in the new year here.

At publishing time, the Chase Slate credit card is offered through Credit.com product pages, and Credit.com is compensated if our users apply and ultimately sign up for this card. However, this relationship does not result in any preferential editorial treatment. This content is not provided by the card issuer(s). Any opinions expressed are those of Credit.com alone, and have not been reviewed, approved or otherwise endorsed by the issuer(s).

Note: It’s important to remember that interest rates, fees and terms for credit cards, loans and other financial products frequently change. As a result, rates, fees and terms for credit cards, loans and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees and terms with credit card issuers, banks or other financial institutions directly.

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The post Looking for a Balance Transfer Credit Card? Here’s 5 Things to Know appeared first on Credit.com.

How a Balance Transfer Check Works

If you’re struggling with debt, you’ve probably considered a balance transfer before. While the more popular way to go about actually transferring your balance from a high-interest credit card over to your zero or low-interest one usually just requires a quick five minutes to do so online or a call to a customer service rep, there is one other way the transfer can be done — via a balance transfer check.

If you go the balance transfer check route, you’ll be receiving the check directly from your credit card company in order to withdraw cash from your credit line. Once you have the check in hand, you’ll have a couple options:

  1. You could make the check payable directly to the company which holds your debt, or
  2. You can make the check payable to yourself in order to get a cash deposit.

In the second scenario, the only real difference is that you’ll be paying your debt off directly from funds transferred from your new balance card into your checking account rather than putting the debt onto the new card to pay off that way.

Still confused? Consider an example. Let’s say you owe $3,000 to a furniture store that you used to furnish your new pad, and you’d like to pay that debt off using a zero interest credit card. In order to go the balance transfer check route, you would simply apply for and open a new card, get a balance transfer check worth $3,000 from your new card made payable to yourself, and deposit it into your bank account. Once the money has cleared, you can pay off your debt to the store free-and-clear while paying off your balance transfer check debt on your new card in installments that don’t accrue interest for however long your introductory period lasts.

Of course there are positives and negatives that come with using a balance transfer check. For starters, not every company will even offer this option, and you’ll need to be sure to read through all the terms and conditions before deciding to use it. Sometimes these transactions take time, and most balance transfer deals come with strict deadlines in order to actually qualify for the zero interest, so you’ll need to watch out for that.

For more on the balance transfer check and whether it’s the right option for you, check out this piece.

The post How a Balance Transfer Check Works appeared first on MagnifyMoney.

How a Balance Transfer Check Works

If you’re struggling with debt, you’ve probably considered a balance transfer before. While the more popular way to go about actually transferring your balance from a high-interest credit card over to your zero or low-interest one usually just requires a quick five minutes to do so online or a call to a customer service rep, there is one other way the transfer can be done — via a balance transfer check.

If you go the balance transfer check route, you’ll be receiving the check directly from your credit card company in order to withdraw cash from your credit line. Once you have the check in hand, you’ll have a couple options:

  1. You could make the check payable directly to the company which holds your debt, or
  2. You can make the check payable to yourself in order to get a cash deposit.

In the second scenario, the only real difference is that you’ll be paying your debt off directly from funds transferred from your new balance card into your checking account rather than putting the debt onto the new card to pay off that way.

Still confused? Consider an example. Let’s say you owe $3,000 to a furniture store that you used to furnish your new pad, and you’d like to pay that debt off using a zero interest credit card. In order to go the balance transfer check route, you would simply apply for and open a new card, get a balance transfer check worth $3,000 from your new card made payable to yourself, and deposit it into your bank account. Once the money has cleared, you can pay off your debt to the store free-and-clear while paying off your balance transfer check debt on your new card in installments that don’t accrue interest for however long your introductory period lasts.

Of course there are positives and negatives that come with using a balance transfer check. For starters, not every company will even offer this option, and you’ll need to be sure to read through all the terms and conditions before deciding to use it. Sometimes these transactions take time, and most balance transfer deals come with strict deadlines in order to actually qualify for the zero interest, so you’ll need to watch out for that.

For more on the balance transfer check and whether it’s the right option for you, check out this piece.

The post How a Balance Transfer Check Works appeared first on MagnifyMoney.

How to do a Balance Transfer with Bank of America

Black woman using credit card and laptop

So, you have been approved for a balance transfer. Congratulations – there is no better way to save money and get out of debt faster. Just make sure you complete the transfer as soon as you receive your card in the mail and never more than 60 days after you apply, because you can lose the introductory offer.

Completing a balance transfer is easy. You can do it on the phone or online, and it should only take a few minutes.

What You Need

You will need the account number and balance of the credit card that has the debt.  These cards will be referred to as the “transfer from” account. If you have a $3,000 balance at Discover, and you want to transfer it to your new Barclaycard account, then you will need the account number and balance of the Discover account.  And, in this example:

  • The transfer from account is Discover.
  • The transfer to account is Bank of America.

Once you have that information, you are ready to go.

Call

You can call the customer service number on the back of your credit card, and they will be more than happy to help you complete the balance transfer. The phone representative will go through security checks and then ask for the credit card number and amount of debt that you want to transfer. Call center employees often receive a bonus to complete a balance transfer, so you will usually find a very eager person on the other side of the telephone line.

The bank makes the payment to your credit card for you.  If you are close to your due date, I recommend making the minimum payment to your card to ensure that you do not have any late fees. The payment (in this example, from Barclaycard to Discover), can take up to 3 weeks. It is usually faster, but you should not take any chances and want to avoid being hit with a late fee.

Online

Most banks make it easy to complete a balance transfer online. Once you receive your credit card, you will need to sign up for online banking. Below, we will show you how to complete an online balance transfer with Barclaycard. Click on these names if you’re looking for a step-by-step guide for: Discover, Capital OneChase or Barclaycard.

Step 1

Login to your account go to “Transfers” and select “For credit card balance transfers”.

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Step 2

Select which account you’d like to use.

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Step 3

Select an offer. You should see the introductory offer listed.

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Step 4

  • The account number of the credit card that has your debt right now.  This is the account number of the transfer from account.
  • The amount that you want to transfer

Most banks have a limit on the total amount that you can transfer.

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Step 5

You will then be shown the terms and conditions of the balance transfer offer, which you will need to accept.

Here are the most important items:

  • Make sure the terms of the balance transfer match the terms of the offer when you applied. If you are expecting a 0% fee and a 0% interest rate for 15 months, make sure that is what you see. If there are any issues, call the bank directly.
  • Make sure you pay on time.  If you go 60 days late, you will lose your balance transfer offer

Step 6

You will then receive your confirmation.  Bank of America will pay your existing credit card bill to roll the debt over to their bank.  But, it can take up to 3 weeks.  So, we recommend that you make the minimum payment if your bill is due in the next 3 weeks.

Remember

  1. Make sure you pay on time.  Paying late (60 days) can lead to a loss of your 0% interest rate.  And it would go to the penalty rate.
  2. Take full advantage of the balance transfer period to pay down as much of your debt as possible.

The post How to do a Balance Transfer with Bank of America appeared first on MagnifyMoney.

Should I Get a Balance Transfer Credit Card?

get-a-balance-transfer

If you have a large, outstanding balance on a credit card that carries a high interest rate, transferring that balance to a card with a lower interest rate might make financial sense for you.

“Transferring a balance from one card to another with a lower interest rate or fee structure can save you money,” Rod Griffin, director of public education for credit bureau Experian, said in an email. “Lower monthly payments can also help you manage the existing debt and pay off the debt more quickly.”

Making the Most of a Balance Transfer Card

One of the most common reasons people get a balance transfer card, according to Griffin, is to “reduce interest rates or fees” to help get their debts paid off sooner. But this only works if you take action to pay off the card before the lower interest rate expires.

If you’re considering a balance transfer card, it’s important to read the terms and conditions carefully. Is there a transfer fee that could potentially negate any savings you might see? Nearly all credit cards with 0% APR promotional financing offers impose a 3% fee on the amount transferred. Does the 0% interest rate expire in six months? One year? Whatever the time frame, it’s a good idea to take a close look at your finances and figure out how much you can put toward paying off your credit card debt during this time.

While you’re focused on paying down your balance, Griffin also advised practicing self-control by putting your old card away so you aren’t tempted to use it to make more charges.

“People get into trouble when they realize they have a card with no balance and begin using it to make additional charges,” Griffin said. “If you lack discipline to not use the old card, you can end up with more debt, not less.”

Same goes for the new card. You’ll want to be smart about your spending and payments so you don’t rack up more debt.

“Missing payments or making purchases could cause interest rates or fees to jump up dramatically and end up costing you more,” Griffin said.

Choosing a Card

The low-interest rates that a balance transfer credit card can offer may be very tempting, but it’s important to do your research. You can start by comparing the best balance transfer cards in America.

“Look for cards with lower-interest rates,” Griffin advised. “Understand the consequences of using the card as well. Do you have to pay a higher interest rate on new charges? Does the interest rate on the transfer expire after a period of time? If it is a ‘teaser’ rate, you need to pay off the balance before it expires or you could end up paying more, not less, in the long run.”

Before you choose any cards, it can help to know where your credit stands, as this will affect what terms and conditions you qualify for. You can see two of your credit scores for free, updated each month, on Credit.com.

More on Credit Cards:

Image: Todor Tsvetkov

The post Should I Get a Balance Transfer Credit Card? appeared first on Credit.com.

How to Use a Balance Transfer Check to Deposit Funds into Your Bank Account

Pretty Young Multiethnic Woman Holding Phone and Credit Card Using Laptop.

If you’re struggling to pay debt on a high-interest credit card, you’ve probably considered a balance transfer. If you haven’t, you may want to.

A balance transfer is when you take a balance from Credit Card A with a high interest rate and transfer it to Credit Card B, which is offering a low or 0% APR promotional period.

There are a few catches to consider before jumping head first into a balance transfer. Some balance transfers have a fee of 3% to 5% per transfer, however, these fees are often much less than you’d pay in interest at existing rates. You’re also required to transfer a balance within a certain timeframe typically within 60 days for it to qualify for the deal. And you need to pay off the transferred balance before the intro period ends. Otherwise, your interest rate will hike to the standard post promotional rate, often 15% APR or higher, or in some cases you may even be on the hook to pay with retroactive interest.

However, if you follow the rules, a balance transfer can help you pay off your debt much faster – even debt that isn’t just on another credit card.

How to Transfer Your Debt onto a Balance Transfer Card

Transferring a balance from one credit card to another is pretty easy. You just hunt for a balance transfer card with favorable terms.

Once you apply and get approved, there’s usually a section in the online account management dashboard where you input the card number of the account from which you want to roll over the balance. Or you can call into a representative to initiate the transfer for you. Within a week or two, the balance will appear on your new account and be paid off from the old account.

Using a balance transfer check is another way to get your debt from one account to another. This option is particularly useful if you need to transfer a debt that’s not on another credit card.

What is a Balance Transfer Check?

A balance transfer check is like a typical check except it’s issued by your credit card company and used to withdraw cash from your credit line. You can write out a check directly to the company that has the debt you want to pay off. Or you can write a balance transfer check payable to yourself for a cash deposit.

Here’s an example. Say you open up a balance transfer card with a $15,000 credit line and you want to pay off the last $5,000 of your student loan. You make out a balance transfer check of $5,000 payable to yourself. Once you get the cash in your bank account, you pay off the student loan with your balance transfer. Then you enjoy an interest-free period on the $5,000 balance that’s now sitting on the balance transfer card.

The Good and Bad of the Balance Transfer Check

Besides using the balance transfer check to pay off debt, you may able to use it to obtain cold-hard cash. In this scenario, you would keep some of the cash or all of it instead of using it to repay a debt. This isn’t a good idea if you’re deep in debt. It’s not free money and you’ll eventually owe interest on it.

There are a few other things to keep in mind when using a balance transfer check. First, not all credit card companies offer balance transfer checks as a way to transfer money. If your sole reason for signing up for a balance transfer card is using a balance transfer check, you need to read through the terms or reach out to the credit card company to make sure it’s an option. Otherwise, you could end up with a balance transfer card promotion that serves no purpose.

Even if you do happen to find a credit card company that offers balance transfer checks, verify that the process of obtaining a balance transfer check will happen quickly. As mentioned above, balance transfer deals usually have a deadline. If you transfer a debt after the deadline, it won’t qualify for the promotion.

You also need to be sure you pay off the balance before the end of the promotional period, especially on debts like student loans. If you use a balance transfer to pay off a student loan debt at 8%, then dropping to 0% sounds great. But if you have a lingering balance of say $1,000 after the promotional period is up, your debt has gone from a high of 8% to probably 18%! Be sure you have an actionable and realistic plan to pay off the debt before using your balance transfer.

Beware of the Cash Advance Convenience Check

You’ve probably come across a convenience check offering a cash advance in the mail before. Sometimes credit card companies will send them out with your monthly statements. Or Credit card companies trying to get your business will send them via snail mail to persuade you into taking on more debt.

Where a balance transfer check allows you to transfer funds with a low-interest or no-interest promotion, withdrawing cash through a convenience check cash advance can be costly. Standard cash advance rates and fees may apply regardless of your balance transfer deal.

For a quick example, Credit Card A offers an intro special of 0% APR that doesn’t apply to cash advances. Going through with a cash advance could cost as much as 25.24% interest right away regardless of a promotional deal.

Be careful and read the fine print that comes along with all checks that come from a credit card company. Whatever check you use to initiate a balance transfer shouldn’t cost you an arm and a leg.

Final Word

We can’t stress enough the importance of making sure a credit card company offers balance transfer checks if that’s the method you want to use. For the most part, transferring a debt from one credit card to another online is the most convenient way to take advantage of a balance transfer special which is something to consider.

If you plan to use a credit card check to increase your bank account balance, it may cost you. Do your homework before hastily writing out a check from your credit card company.

The post How to Use a Balance Transfer Check to Deposit Funds into Your Bank Account appeared first on MagnifyMoney.