If you have ever tried to apply for a credit card, when studying the possibilities, you have certainly come across the term “balance transfer”. So, most likely, the question must have arisen: “What are credit card balance transfers?”.

Thus, this feature is very common on cards created for customers with good or excellent credit scores. In addition, it is responsible for maintaining the financial health of several families across the country.

However, to know how this feature can benefit you, when and how to use it, you need to know it well. That’s why we’ve put together an exclusive article to explain what this credit card balance transfer is.

So, read this article carefully and understand how to make the most of this feature.

In fact, nearly half of the American population carries unpaid credit card balances for a year or two. On average, this debt is $6,081. At first glance, this value may not seem very worrisome to you.

However, due to interest and penalties commonly charged by credit cards, this amount can grow and become practically unpayable in a short time.

Not to mention the damage that the credit score and history of those who accumulate this type of debt can suffer!

Fortunately, there’s a feature that can help you bypass your credit card APR and interest if you’re having trouble paying your balance. In fact, this feature is called “balance transfer”.

Thus, the name is extremely self-explanatory, but we want to detail as much as possible what credit card balance transfers are, especially for those who are starting their own financial life now.

Thus, a balance transfer is a feature that allows you to transfer the unpaid balance from one card to another credit card. You must be thinking right now, “how can this help me?”.

In fact, this option is great for your financial health if you transfer your debt to a lower APR card. In practice, this means that your debt will be reduced, as you will pay lower amounts of interest. Also, some cards offer an initial period of 0% APR.

This condition ensures that your debt does not grow (no interest will be charged) for a long time (usually more than a year).

Therefore, requesting balance transfers can have some impact on your credit score. In fact, this can happen in three different ways. Check out each of them below:

To make this type of transfer, you will likely apply for a new card. In fact, every time you apply for a new card, your “credit age” goes down. The credit age is the average time of card activity that the same person has.

If you’ve been using cards for a long time, credit bureaus understand that you are a trustworthy person. Because of this, they tend to calculate a higher credit score for you.

However, if you have a new card (i.e. 0 years) your credit age will decrease and as a consequence your credit score will also decrease.

Considering that you have applied for a new credit card, your score will temporarily be lower than expected. This is due to the effect of the recent candidacy. Every time you apply for a new card, your credit score temporarily goes down.

This is an effect programmed by the credit bureaus and guarantees that you will not accumulate multiple cards in a short period of time. After a few months, your score will return to its normal level.

If you transfer your debt to a card with a lower credit limit, you will likely consume a lot of that limit. Credit agencies understand this as a risk factor for debt, so they will lower your credit score.

So, remember that the ideal is not to exceed 30% of the monthly use of the limit to maintain greater financial health.

You are still in doubt about whether or not to make a balance transfer. Well, in order not to regret it later, it is important to know the advantages and disadvantages of this maneuver.

So, read the main advantages and disadvantages of making this type of transfer:

If you have two cards, one with a debit balance and the other to receive the transfer, there are two ways to request this service. In effect, you can call the customer service center of the card that will receive the balance and request the transfer.

Some cards allow you to do this online.

To transfer balance, credit cards usually charge fixed amounts ($5, for example) or percentages of 3% to 5% of the transfer amount. Thus, the lowest market value is 3% and can be used as a basis for your research when choosing the best option.

There are cards that offer even lower Bludger transfer rates. However, it is important to calculate this benefit according to other rates these cards offer.

No matter how much you transfer the entire balance of a credit card, the old card will not be canceled. In effect, it will remain active unless you request cancellation.

So that your score does not suffer from the lowering of the credit age, we advise you to leave it active, if this does not mean more expenses for you.

The real antidote to debt is maintaining good financial health. In fact, to enjoy this condition, planning is necessary. If that’s what you need, click on the link below and learn about four of the best financial advice anyone wished they’d heard before.