Tag: Balance Transfer

Student Loan ReFi

Should You Refinance Your Student Loans with a Credit Card?

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Using a balance transfer credit card can be a great way to lower the interest rates on your debt to help you save money and pay your debt off faster. Most people only think about doing a balance transfer with high-interest credit card debt, but recently I’ve been considering a 0% interest balance transfer credit card to help me pay off my student loan.

After making my final credit card payment to be credit card debt free, I started thinking about how I could use a balance transfer offer extended by my creditor to help pay off other types of debt I still have. Since the highest interest debt I have remaining is my student loan, this is what I’m considering refinancing with a 0% interest balance transfer. My student loan only has a remaining balance of about $6,000, which means I could transfer the entire balance to the credit card and pay it off before the promotional rate expires, if I pay it off aggressively.

Of course, there are lots of reasons why you could choose to refinance or consolidate your student loans. I was curious whether or not a balance transfer could be a viable option as well.

Here are some of the pros and cons you should consider before deciding to refinance your student loans with a balance transfer credit card.

Benefits of Refinancing Student Loans with a Balance Transfer Credit Card

There are several benefits you could take advantage of by refinancing your student loans with a balance transfer credit card.

A Lower Interest Rate

One of the main reasons people choose to refinance student loans is to lock in a lower interest rate. For example, my student loans are at 6.8%. If I do a balance transfer to a 0% interest credit card, I could save hundreds of dollars on interest through the end of the 0% interest rate period on the balance transfer.

But keep in mind that not all balance transfers are created equal. You might get all kinds of different balance transfer offers from companies trying to entice you to sign up for a new credit card, or even transfer a balance to a card you already have. Some of these transfer offers will be better than others. You might encounter offers that have a 1% to 3% interest rate for a certain period of time, usually 12, 18, or 24 months. But the best balance transfer offers have a 0% interest rate, obviously saving you more on interest than the others.

Pay Off Student Loans Faster

Transferring student loan debt to a credit card can save money, but only as long as you get the balance transfer paid off before the promotional interest rate expires. This time limit is a big motivation for people to pay extra on their student loans to make sure the balance transfer is paid off before it expires. If you struggle with being motivated to make extra payments, the reality that your interest rate may spike up to 15% or more after a few months may be just the motivation you need to get serious about paying off debt. It’s worked well for me in the past when I’ve transferred high-interest credit card debt to a 0% balance transfer credit card, helping me to pay off $5,284.18 much faster than I would have otherwise.

Drawbacks of Refinancing Student Loans with a Balance Transfer Credit Card

Although using a balance transfer to help pay off your student loans sounds like a great way to save money and pay your debt off faster, there are some potential downsides you should be aware of.

Balance Transfer Fees

A lower interest rate makes balance transfer credit cards an attractive option for those looking to refinance debt, but you need to consider more than just the interest rate before deciding to refinance your student loans with a balance transfer credit card. Make sure you consider the balance transfer fee that many credit cards charge. This can eat away at the amount of money you save on interest. Luckily, some credit cards do have a cap on this fee at $50 or $75, which can be helpful if you plan to transfer a large balance that would otherwise result in a fee higher than that cap. But at that point, it could be difficult to get your student loan transfer paid off before the promotional interest rate on the balance transfer expires.

There are balance transfers without fees, but your options may be limited. If you find a no-fee, 0% interest transfer option you qualify for, it’s almost a no-brainer to use it to pay off other debt.

Potential Loss of Savings on Interest

As mentioned, it’s imperative that you pay off your entire balance transfer before the promotional interest rate expires in 12, 18, or 24 months. If you don’t, the high interest rate after the transfer expires will quickly negate any interest savings you earned by doing the transfer in the first place. In fact, you may end up paying more in interest than if you’d skipped the balance transfer in the first place.

You May Not Qualify

In order to use a balance transfer credit card to refinance your student loans, you first have to qualify for one. In order to qualify for many balance transfer credit cards you must have a credit score of at least 680.

Applying Could Ding Your Credit Score

If you don’t already have a credit card with a balance transfer offer available, you may need to apply for a new card. Anytime you apply for a new line of credit, it will ding your credit score slightly. This may or may not be an important factor depending on what your score is and if you plan to apply for any other credit cards or loans in the near future.

Loss of Federal Student Borrower Protections

A final and very important consideration to think about before you decide to refinance your student loans with a balance transfer credit card is the loss of student loan protections you may have. If you are refinancing federal student loans, you will lose the protections that are offered to you as a borrower, such as:

  • Income-driven repayment plans
  • The opportunity for student loan forgiveness
  • Deferment or forbearance
  • Discharge upon permanent disability or death

Some credit card companies may be willing to work with you in an emergency situation, but chances are high that even in those situations the flexibility offered to federal student loan borrowers is far greater. In some cases, you may be better off not refinancing your student loans in order to maintain your borrower protections.

With most low or 0% interest balance transfer credit cards, you can’t miss a payment or pay late. If you do, your promotional interest rate may be void and you will be subject to the regular interest rate, which could be 15% or more depending on the card and your credit score.

Despite these drawbacks, doing a balance transfer to help pay off your student loans can be a good idea if your goal is to get out of debt quickly while saving money on interest.

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Balance Transfer

Discover It Balance Transfer Review

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Balance Transfer Review

Updated April 3, 2017

Credit card debt is a burden weighing down the budgets of many Americans. If you’re motivated to unlock the shackles of consumer debt, then a balance transfer may be right for you. But finding the right one can be overwhelming. “Discover it® – 18 Month Balance Transfer Offer” is an excellent option for people with debt. You will have an introductory 0% APR on balance transfers for the first 18 months, with a 3% balance transfer fee.

Key Credit Card Features

For people with credit card debt, the most important feature is the generous balance transfer offer. If you transfer debt from any other credit card company, you will pay a one-time fee of 3% of the amount transferred. But you will then pay no interest for 18 months. You could save hundreds of dollars (and potentially more) during the interest-free period. Just make sure you get your transfer completed as soon as the account is opened and that you make your monthly payments on time. 0% for 18 months is one of the best balance transfer credit cards on the market today.

In addition to charging no interest on balance transfers for 18 months, the card charges 0% interest on purchases during the first six months. You will be able to earn cash back on your purchases as well. However, we strongly recommend using a balance transfer credit cards only for balance transfers so that you can get out of debt faster.

Do You Need a Balance Transfer?

Most people who are paying down credit card are subjected to interest rates north of 15%. Reducing interest rates on debt with a balance transfer can slash both the time and money it takes to pay it all down.

But let’s not get ahead of ourselves here, a balance transfer isn’t right for everyone.

[Find out how much you’ll pay in interest on credit card debt here.]

How Do You Qualify For a Balance Transfer?

Banks will only offer balance transfers to people with good or excellent credit. Typically, the ideal candidate will have:

  • A good or excellent credit score. Your score does not have to be perfect, but your chances are much better if you have a good score.
  • Your debt burden will be considered, and the lower the better. If you are having difficulties making monthly payments, a balance transfer is not for you.

Note: Your debt burden is calculated by adding up your monthly fixed expenses and dividing that by your monthly income. The expenses should include your monthly rent or mortgage payment, auto payment, student loan payments and the monthly payment on any other credit cards or loans that appear on your credit bureau. The higher that number, the more likely that lenders will not approve your application.

Also take into consideration why you’re in debt. Don’t get another credit card if you’re swipe happy and won’t be able to help but spend on the new credit card.

Is Discover It the Balance Transfer Right for You?

promo-balancetransfer-halfThe Discover It balance transfer is only right for you if your credit card debt is with another bank. You cannot do a balance transfer from one card to another within the same bank.

Discover It currently offers an introductory 0% APR balance transfer for 18 months. There is a 3% balance transfer fee, but the fee often pays for itself — depending on your balance.

If you were approved for a balance transfer of $5,000, a 3% fee would equal $150. That shouldn’t sound like a lot, because leaving $5,000 at a 17% interest rate (with a payment of $250 a month), you’d pay the bank $153.16 of interest in just four months.

The Discover It balance transfer would save you $741, including interest and fees.

Should the Discover It be Your First Balance Transfer Card?

While Discover It does offer a competitive balance transfer, there are other option out there.

With Chase Slate®, you can save with a $0 introductory balance transfer fee and get 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee.

The higher the debt, the more attractive Discover’s balance transfer offer becomes.

Fine Print Alert: What to Watch Out For 

If you do complete a balance transfer with Discover, make sure that you:

  1. Complete your balance transfer as soon as possible. If you wait too long, you can lose the offer.
  2. Continue to pay on your old credit card until you see that the balance transfer has been completed. It can take two to three weeks for the balance transfer to complete, and you don’t want to be hit with late fees on your old credit card while waiting for the transfer.
  3. You can only move debt to Discover from another bank. You cannot transfer debt between two credit cards with Discover.
  4. Make your payments on time, every month. They charge a late fee of up to $37. Discover does state they waive your first late payment fee on the Discover It card, but that isn’t a benefit you should plan on using.

How to Complete a Balance Transfer with Discover

We’ve created an entirely separate post featuring screenshots and explanations on how to complete a balance transfer with Discover. You can find it here.

If you run into road blocks or have any questions, don’t hesitate to reach out to us via email (info@magnifymoney.com) or on Twitter @Magnify_Money.

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Balance Transfer, Pay Down My Debt

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

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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 and get 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

If you don’t think Chase is for you, consider Discover, which offers an intro 0% APR for 18 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 5.99% 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. One of our favorite lenders is SoFi, which has some of the lowest interest rates on the market if you have good or excellent credit. Variable interest rates start as low as 4.99%*. You can apply now on their website, without impacting your credit score, by clicking on the apply button below.

SoFi logo

Apply Now

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Balance Transfer

Citi Simplicity Review: Now 0% Balance Transfer for 21 Months

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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If you have credit card debt, a balance transfer may be the best way to get out of debt faster. And Citi has just made balance transfers a whole lot more appealing. You can now have a 0% interest rate for 21 months. That is a massive increase from the 18 months that they were offering earlier. You have to pay a 3% fee to transfer the debt. If you can’t afford to pay off your debt in 6 months or less, the savings can be dramatic.

Here is a simple example of how much you could save. If you have $10,000 of credit card debt at a 17% interest rate and make a payment of $300 per month, you will end up saving $2,069 over 21 months if you transfer the debt to Citi Simplicity. That savings includes the cost of the transfer fee.

Apply Now

Credit cards do not have a great reputation. They lure you in with flashy marketing and a big sign-on bonus, only to hit you with late fees and penalty interest rates if you make a mistake. Citi has tried to create a simpler credit card that eliminates the confusing fine print. And they have rather ambitiously named the card “Citi Simplicity.”

How the card works

If you are looking for rewards on your spending, this is not the credit card for you. The Simplicity credit card does not offer rewards.

There are two parts to the Citi Simplicity story:

  1. An amazing introductory offer on spending and balance transfers that can help you save a lot of money, and
  2. A rather ordinary-looking credit card that has eliminated the most egregious credit card charges, but is still an expensive way to borrow money and has some other hidden costly traps

The Introductory Offer

The Citi Simplicity credit card has one of the best introductory offers in the market. There are two parts to the intro offer:

  • 0% interest charged on purchases for 21 months, and
  • 0% interest charged on balance transfers for 21 months. There is a 3% balance transfer fee

The offer used to be 18 months at 0%, and Citi has extended that offer dramatically, to 21 months. The savings for people with credit card debt can be enormous.

If you need to finance a purchase, then applying for a Citi Simplicity credit card and using it to make a purchase is the best way to get a true 0% offer.

There is a big difference between deferred interest and waived interest. In a deferred interest offer, you have to pay the balance in full before the promotional period is over. If you don’t pay the balance in full, than you will be charged interest retroactively from the date of the purchase. Fortunately, Citi Simplicity waives the interest. So, if you still have a balance remaining in month 22, interest will only be charged on a go-forward basis. It’s truly 0% for the first 21 months.

If you want to compare Citi Simplicity to the other balance transfer offers available on the market, you can do that here.

If you have debt, Citi Simplicity can be a great way of cutting your interest expense and paying off your debt faster. Just remember that:

  1. You have to complete your balance transfer within four months of opening the account, otherwise you do not receive the promotional rate
  2. If you are 60 days late on a payment, you can lose your promotional rate

Life After the Intro Offer

After the intro offer, the card starts to look a lot more ordinary. Like most cards without rewards, Simplicity does not charge an annual fee. There are three places where Simplicity has decided to stand out:

  1. No late fee
  2. No penalty pricing
  3. The same interest rate on purchases and cash advances

Lets look at each of those promises in more detail:

Late Fee

Late fees can be outrageous on credit cards, with some banks charging $30 or more. We applaud Citi for waiving the late fee on this account. However, they still have a returned payment fee up to $35. So, if you write a check that bounces, be prepared to pay for it.

And remember that late fees can still get you into trouble in other ways. Once you are 30 days late, Citi would report that information to the credit bureau. That will hurt your credit score, which could result in higher interest rates elsewhere, on other products. Just because there is no late fee does not mean that there aren’t expensive consequences elsewhere.

Penalty Pricing 

Penalty pricing used to be easy money for the credit card industry. They could find a reason to increase the interest rate on your existing balance, and then just do it. I have seen some horrible examples of people receiving massive interest rate increases without ever having missed a single payment. However, the CARD Act made that illegal. Now, the only way that credit card companies can reprice is on your go forward purchases. And Citi has taken a leading role, promising not to charge penalty interest rates. Although mistakes can be expensive, Citi is making them cost a bit less with this feature.

Same Interest Rate for Purchases and Cash Advances

Credit card companies have, over time, increased the interest rate on cash advances dramatically. It is not unusual to see a cash advance APR near 30%, and without a grace period.

Citi has decided to keep the same price for purchases and cash advances.

There is only one problem: the interest rates are high, and you don’t know your interest rate until after you apply and are approved. The interest rate on Citi Simplicity ranges from 14.24% to 24.24%, depending upon your score.

If you plan on traveling outside of the country, Citi Simplicity still charges the pesky 3% foreign exchange fee. That can add up quickly.

In Conclusion

If you already have debt and are looking for a way to reduce the interest rate and pay down your debt quicker, the 21 months balance transfer offer from Citi Simplicity is an excellent deal that could take years off your debt repayment.

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Just make sure you complete the balance transfer within four months, make your payments on time and don’t spend on the card. Your goal should be to get out of debt, and this card can be a great tool.

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Balance Transfer

How to do a Balance Transfer with Bank of America

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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.

TAGS:

Balance Transfer, Pay Down My Debt

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

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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 using a balance transfer check.

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. And your credit card company might send you checks in the mail to transfer a balance.

 

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.

Some balance transfer checks 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.

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.

TAGS:

Balance Transfer, Building Credit

How a Balance Transfer Affects Your Credit Score

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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A balance transfer is an extremely effective way to cut down the amount of interest you pay on your debt. Applying for a balance transfer does require a hard inquiry on your credit, which is likely to impact your credit score.

But there’s no reason to freak out.

How Your Score Will Be Affected

According to FICO, a hard inquiry on your credit results in a score drop of about five points or less. Then, after a few months of appropriately using your credit by paying your debts on time, you’re likely to see your score bounce back up.

In fact, you may even see your score increase. This is because while new credit makes up 10% of your credit score, the amount you owe accounts for 30%. A huge component of the amounts you owe isn’t necessarily dependent on the actual dollar amount, but rather on your credit utilization ratio. To find this ratio, you divide how much you owe by your total available credit limit (across all cards).

Let’s say you had $7,500 in credit card debt, and it was your only debt. You only have one credit card with a $10,000 limit. You applied for another card that was offering you a reduced interest rate to entice you to do a balance transfer, and you took it. That card gave you an additional credit line of $5,000.

There was a 3% fee to transfer the $7,500, so now your total debt is $7,725. Where your credit utilization used to be 75%, now it is only 52%. You may owe a bit more money, but since your credit utilization went down, you’re likely to see your credit score jump up a little bit. The $225 extra will probably end up saving you money, but let’s walk through how.

How a Balance Transfer Can Save You Money

The fact that you now owe an additional $225 may make you cringe, but in all reality, the balance transfer will save you money long-term. In this example, you were offered an introductory interest rate of 0% for 18 months and then 15% APR after the promotional period ends. You currently pay 18% APR on your $7,500 debt and make monthly payments of $200.

If you don’t take the balance transfer and make the $200 monthly payment, it will take you 56 months and cost $3,604 in interest to get debt free.

If you take the balance transfer and make the same $200 monthly payment, you could be debt free in 43 months and only pay $900 in both interest and fees (that $225 to transfer the balance). You could even transfer the balance at the end of your first promotional period to another 0% APR offer with no fee for 15 months and be debt free in 40 months and pay $423 in interest and fees.

That initial hit on your credit score and $225 fee will save you $2,704 in interest with one balance transfer or $3,181 with multiple balance transfers.

Well worth the price.

When You Might Want to Wait

If you credit score falls below the “good” range, which would mean your score is below 680, it may be wise to wait before applying for a balance transfer. Financial institutions generally will not accept your application if you’re at 679 or below, but they will have to complete the hard inquiry in order to get that information. That means your score is still likely to drop, but you won’t be seeing any of the rewards of decreased credit utilization.

If you’re close to the cutoff, waiting until you hit that magic 680 number may be a good idea. While you’re waiting, be sure to do things that are likely to improve your score, like:

  • Paying at least your minimum payments on time every month.
  • Paying all your other bills on time so nothing delinquent pops up on your credit report.

As you pay your minimum payments on time every month, your creditor likely be reporting positive information to the credit reporting agencies.  At the very least, they won’t be reporting negative information.

If you make more than the minimum payment, your balance will go down faster which will lower your credit utilization, and we’ve already seen how that positively affects your score.

After your score increases, you’ll be more likely to qualify for the balance transfer with low or no interest rates. At that point, taking the small hit will be worth it.

Another time you may want to wait before applying for a balance transfer is if you are thinking about taking out a mortgage in the near future. This is one of the biggest purchases you’re likely to make in your life. The higher your credit score when you apply, the lower your interest rates will be, so even a small hit from a hard inquiry could increase your interest rates.

Go For It

If you qualify and are not thinking about making a massive purchase in the near future, taking the temporary, small hit on your credit score is more than likely worth the savings. Just be sure to pay at least the minimum due every month once you’ve made the balance transfer; otherwise your interest rates will jump back up, negating the advantage of this strategy.

A good credit score is something to be leveraged. The entire reason you want one is to enable you to save money. While it might be nerve-wracking to watch it decrease slightly, paying more interest than you have to is a bigger cause for concern.

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Balance Transfer, Earning Cashback, Reviews

Chase Freedom or Chase Slate: How Do You Know Which to Pick?

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Chase Freedom or Chase Slate

Are you looking for your next credit card? If so, one of the companies you may have considered is Chase. Two of the most popular products offered by Chase are the Chase Freedom and the Chase Slate® credit cards. If you are wondering which card, Chase Freedom or Chase Slate®, will best meet your needs, read on to see our head to head review.

Chase Slate®

Chase Slate® is a great credit card for balance transfers. Save with a $0 introductory balance transfer fee and get 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee. Plus, receive your Monthly FICO® Score for free. Just make sure you get the balance transfer done within 60 days of opening the account. This offer can help you pay off your debt efficiently as your full payment will go towards the principal balance.

There is an ongoing purchase APR of 15.74% – 24.49%. This is the APR that will apply after the balance transfer period ends.

There is no penalty APR for paying late. However, other terms apply, like paying a late fee if you miss the payment deadline.

That may sound too good to be true, but it isn’t as long as you follow 3 rules:

  • Complete your balance transfer within 60 of opening your account. Transfers made after 60 days will be subject to standard balance transfer fees and interest rates.
  • Pay your bill on time every month. If you are one day late with your payment, you will be subject to a late fee.
  • Transfer debt from another bank. The intro 0% APR is not applicable to debt transferred from another Chase credit card, including co-brand credit cards issued by Chase like Southwest Airlines, United Airlines, and more.

Chase slate

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Chase Freedom®

Once you are at a point in your financial journey that you can trust yourself to use credit wisely in order to take advantage of credit card rewards, then Chase Freedom is a strong contender.

Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories every 3 months. Unlimited 1% cash back on all other purchases. Earn a $150 Bonus after spending $500 on purchases in your first 3 months from account opening.

You also have to enroll online to activate the 5% cash back categories. If you forget to activate them, you will only earn the standard 1% cash back, even if you make purchases within the bonus categories of the current quarter. The good news is that you have a grace period of 2 months to get enrolled in the bonus categories each quarter, so you can earn 5% cash back on purchases in the bonus categories even if you didn’t remember to enroll right away.

Rewards are earned as points in part of the Chase Ultimate Rewards system, which you can then redeem for cash back as a statement credit, gift cards, travel, and more through your online account. You do have to meet a minimum of 2,000 points, or $20, to redeem your rewards.

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Pros and Cons

Chase Slate®

  • Pro: Balance transfer is a highly competitive offer.
  • Con: You can only transfer debt from cards not owned by Chase. Chase is a large bank, so some of your debt may already be held at Chase Bank even if you were not aware of it.
  • Pro: Interest charged during month 16 is charged going forward, not retroactively.
  • Con: Interest rates after the promotional period are 15.74% – 24.49% variable depending on your credit score.

Chase Freedom®

  • Pro: Bonus categories offer the opportunity to earn some serious cash back.
  • Con: You must actively opt in to the bonus cash back
  • Pro: Unlimited 1% cash back on all other purchases
  • Con: You have to reach a minimum threshold of 2,000 points, worth $20, in order to redeem your rewards.

When to Use Each Card

Chase Freedom and Chase Slate® are not cards that will likely be used by the same target customer. The Chase Slate® card is a great tool to use if you are trying to get out of debt because you’ll be able to focus on paying off your principal balance instead of paying high interest rates. Just be sure to make your payments on time and pay as much above the minimum due as you can afford.

Another balance transfer option to consider besides the Chase Slate® credit card is the Citi Simplicity credit card. The Citi Simplicity credit card offers 0% APR for 21 months. However, there is a 3% balance transfer fee on the Citi Simplicity credit card.

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Chase Freedom is a rewards card that may make sense to have in your wallet if you are able to use credit responsibly. However, you might want to consider a flat rate cash back card, like the Citi Double Cash, which offers 1% cash back upfront and another 1% cash back when you pay off the bill, which is double the cash back of the Chase Freedom outside of the 5% cash back bonus categories.

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Which card you use, Chase Freedom or Chase Slate®, depends on your personal financial situation and your goals. If your goal is to pay off debt, Chase Slate® is the way to go out of the two, but if you are interested in earning rewards for your everyday spending, Chase Freedom may be right up your alley.

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Balance Transfer, Reviews

Chase Slate or Citi Simplicity: Which Balance Transfer Should You Pick?

Advertiser Disclosure

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

Chase Slate or Citi Simplicity

Credit cards can be a great financial tool – if you know how to use them properly. But if you’ve found yourself in credit card debt, that may be hard to believe.

One way to help you pay off your credit card debt efficiently is with a balance transfer. A balance transfer can allow you to move debt from one credit card to another to obtain a much lower interest rate so more of your money payment is going toward paying off the principal balance of your debt instead of those pesky interest charges.

In order to take advantage of a balance transfer to save the most money and help you get out of debt as fast as possible, you may have to open up a new credit card. Yep, you heard right. Sometimes opening up a new credit card can save you money. That’s because some credit cards offer great promotional deals for balance transfers with 0% interest rates for a period of time so you can pay off your debt faster.

Once you’ve come to that conclusion, the far more challenging decision is which credit card to apply for so you can get the best deal possible. Choosing one of out hundreds of offers can be tricky.

Two popular cards are Chase Slate® and Citi Simplicity. But which one is a better fit for you?

Let’s dive in and take a look with a head-to-head review of these popular credit cards.

Chase Slate®

Chase Slate® is a great credit card for balance transfers. Save with a $0 introductory balance transfer fee and get 0% introductory APR for 15 months on purchases and balance transfers, and $0 annual fee. Plus, receive your Monthly FICO® Score for free.

The ongoing purchase APR is 15.74% – 24.49% variable.

There is no penalty APR for paying late. However, other terms apply, like paying a late fee if you miss the payment deadline.

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Citi Simplicity

Citi Simplicity is another popular balance transfer credit card choice. This card offers a 0% APR for 21 months on balance transfers and new purchases, which offers a notably 0% duration difference to Chase Slate® card. After the promotional period ends, your APR will be between 13.49% and 23.49%.

However, the Citi Simplicity does charge a balance transfer fee of 3% or $5, whichever is greater. This is not waived for a certain time period for new customers, and the balance transfer option with 0% interest for 21 months is only available to new card members on balance transfers made within 4 months of opening their account.

Citi Simplicity has no annual fee and also promises not to charge a penalty interest rate on late payments. It also does not charge late fees.

Citi_Simplicity

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Pros and Cons

Now that you’ve seen an overview of each card, let’s sum up some of the pros and cons of each as a balance transfer credit card to help you pay off debt.

Chase Slate®

  • Pro: You can save a lot with the balance transfer. Credit card interest rates are high. By taking advantage of Chase Slate®, you could significantly reduce your interest expense.
  • Pro: No penalty APR for a late payment.
  • Con: There is a late payment fee, so make sure you pay on time.
  • Con: You can only transfer balances from non-Chase banks. You cannot transfer debt from another Chase credit card or from a co-brand, like Southwest Airlines or United Airlines.

Citi Simplicity

  • Pro: 0% APR on balance transfers and new purchases for 21 months. After 21 months, interest is charged going forward, but you will not be charged deferred interest. This is longer 0% period than the Chase Slate®.
  • Con: Interest rate after 21 months will be high.
  • Pro: No penalty APR or fee on late payments.
  • Con: 3% balance transfer fee from account opening which is relatively common for similar balance transfer offers.
  • Pro: No annual fee.
  • Con: 0% promotion expires. Balance transfers must be made within 4 months to qualify for the 0% interest promotion. So don’t delay in moving any debts over once you’re approved.

When to Consider Each Card

Obviously both of these cards can be useful if you are trying to transfer your credit card debt to save on interest and pay off your balance faster. However, which card you choose comes down to doing a little math and considering your personal circumstances.

On one hand, the Chase Slate® card offers a 0% intro balance transfer fee, which makes it an attractive option if you hate paying fees. However, it charges a fee for late payments, unlike the Citi Simplicity card. This fee can add up quickly if you are notorious for paying your bills late and may more than make up for the 3% balance transfer fee charged by the Citi Simplicity card.

Another consideration is how much debt you plan to transfer. You want to make sure you can pay off your transferred balance in full before the promotion expires to avoid paying interest charges. The Citi Simplicity is popular because it offers such a long promotional period in which you’ll be paying no interest. But once again, you need to consider how much it will cost you to transfer your debt with its 3% balance transfer fee.

Finally, if the debt you are wanting to pay off is on a Chase card already or held at a co-brand, like Southwest Airlines or United Airlines, you won’t be able to transfer the balance onto the Chase Slate® card to save on interest. In this case, the Citi Simplicity card clearly wins out.

Neither card charges an annual fee, which works in your favor.

Ultimately, you can’t go wrong with either card as long as you are using them to save money on interest and pay off your debt. It’s all about personal preference and your debt situation.

Other Balance Transfer Options

There are a lot of other balance transfer credit cards to consider. In fact, we’ve put together a list of credit cards that offer great balance transfer options, which you can check out here.

One that made the list is the BankAmericard Visa, which offers a 0% APR on balance transfers for 18 months. Like the Citi Simplicity card, the transfer fee on this card is 3%. You must also make your balance transfer within 60 days of account opening.

BankAmericard

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You can also consider other 0%, no fee balance transfer cards like Alliant Credit Union’s card with 0% APR for 12 months and no fee. You will need to become a member of Alliant CU in order to be eligible for the card, but luckily anyone can join by making a $10 donation to Foster Care to Success.

Alliant Visa Platinum

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Feel overwhelmed with how to get started? Check out our guides for how to complete a balance transfer here.

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News

4 Sneaky Ways That Banks Can Trick You, According to a Former Banker

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The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

4 Sneaky Ways That Banks Can Trick You

When you work in banking for nearly 15 years, the way MagnifyMoney co-founder Nick Clements did, you come away with what can only be described as an insider’s knowledge of the ins and outs of the business. Clements certainly did, including some of the sneaky ways that big banks trick us into spending our money.

Here are the four big ones that Clements suggests consumers be on the lookout for.

1. Retroactive Interest

Unless you’ve been living under a rock the past couple of months, you’ve probably become familiar with the “free 0% financing!” offers that tend to be pushed pretty aggressively by retailers and credit card companies during the holidays. If you’re not careful, though, those 0% offers could end up costing you a pretty penny in the form of deferred interest. What happens with this type of card is that interest for purchases made on it will be set at 0% for a certain number of months. If you can pay your card off in full at the end of that time period, great — you’ve made the most of the offer. If you carry over a balance, however, interest will then be retroactively charged at the standard purchase rate, which tends to be much higher than average on these types of cards. Check out this piece for more about deferred interest and how to avoid it.

2. Re-ordering transactions

If you have overdraft protection on your account, this sneaky little trick could really sting you, and nearly half of banks still do this, says Clements. What happens is that banks will reorder your transactions throughout a day to maximize the number of times that you pay overdraft fees. Consider this example: You start the day with $50 in your account. You then make three withdrawals throughout the day, the first at 10 a.m. for $20, the second at 1 p.m. for $20 and the third at 7 p.m. for $40. In this particular scenario, you should have only overdrawn on your account at the third transaction, right? The trick happens when your bank reorders your withdrawals so that the $40 happens first, then a $20 and then the final $20. In this case you would have actually overdrawn twice. This sneaky little move is surprisingly legal, and incredibly unfair. For more on how to eliminate overdraft fees, check out this piece.

3. More overdraft woes

Besides what’s mentioned above, another issue can come up with overdraft protection when you try linking your credit card to your checking account. In doing so you may inadvertently get charged two fees right away when you overdraw — the first being an overdraft transfer fee from your checking account and the second being a cash advance fee on the credit card. If that’s not enough, the balance on the credit card is then treated as a cash advance, says Clements, which means there’s no grace period and interest begins to accrue right away, and at a much higher rate.

4. Grace period problem

In most cases, the simple act of completing a balance transfer onto a new credit card will cause the consumer to lose their grace period on purchases. The only time this isn’t usually the case is when a specific 0% offer for purchases has been made for the card. Use this tool to help compare different balance transfer options on different cards.

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