Balance transfer credit cards have been a popular choice among consumers who are looking for ways to consolidate debt, but current rates here on July 1 and requirements in terms of the credit score a consumer needs will dictate whether these cards are available or helpful for consumers looking to consolidate and pay off debt at little or no interest. While this topic has been covered over the past months, rates have remained relatively stable, but there are some changes that consumers may need to be aware of here at the first of the month which could help those who are deciding whether a credit card, or this particular card, will be right for them.
While there are various agencies that rate the averages of various cards, balance transfer credit card rates are currently standing at around the upper 12% to 16% range. These cards must be carefully explored though, as there are some requirements that will come with a particular lender before one of these low rates can be kept or, in the cases of a low introductory rate or 0% interest offer, some cardholders may have to make a minimal amount of purchases before these low rates remain available as well.
In terms of the credit score that a consumer will need before they might be able to use one of these cards, the vast majority of cards that are advertised for this balance transfer option do require an excellent credit score, but this will vary depending on the lender and there are some subprime credit cards that may also allow a consumer to transfer a balance also. It goes without saying, the better a consumer’s score the higher the likelihood they will get an affordable rate, but consumers need not be drawn into a balance transfer credit card, or any other credit card for that matter, simply due to the bells and whistles that come during the introductory period.
As an example, these balance transfer cards can be used to help consumers consolidate debt and, when conditions are met and the low or 0% interest rate remains associated with this card for a long period of time, there are situations in which consumers have been able to pay off their consolidation without having to meet interest payments. Obviously, this lowers the overall amount of debt that a consumer has to repay, but there are fees that are usually associated with transferring balances and, if the cardholder is not careful, this fee may outweigh any benefits from this particular type of card.
Also, many financial advisers want consumers to understand that, unless a great deal of financial responsibility is in place and a consumer is well aware of the terms and conditions that come with credit card use, simply signing up for a credit card for the purposes of transferring a balance is not necessarily going to be the best reason for doing so. While some have been looking for a credit card to use for various purchases or to build up their credit and have also been able to use this consolidation option to their advantage, it must be remembered that simply moving debt around from multiple obligations to a consolidation agreement is one of the signs that a consumer may not have their finances in order, so reflecting on one’s personal financial position, payment history, and repayment habits should also be one of the steps consumers take when considering a balance transfer credit card.