What Is a Credit Card Transfer and Should I Get One?

Do you find yourself asking, “What is a credit card transfer?” Are you wondering if it will help you manage your debt? 

Credit card transfers are a useful debt strategy for many people. However, there are a few things you should know about how this process works—like the various pros and cons—before deciding whether to get one. 

Here are all the answers to the question, “What is a credit card transfer?”

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What is a credit card transfer? 

A credit card transfer is when credit card debt is moved from one credit card to another. It’s one of many debt consolidation strategies with the goal of saving money on interest. 

Oftentimes, the new credit card will feature a 0% introductory APR promotion period. By transferring debt from a high-interest rate to a 0% APR account, you could save a significant amount of money on credit card debt and pay down debt faster. 

How does a credit card transfer work? 

Some credit cards will offer 0% introductory APR promotional periods to new customers. The promotional period usually lasts from 12 to 18 months, and during this time, your outstanding balance won’t accrue interest. If you can get your hands on a 0% APR credit card, you might be considering a balance transfer. 

A credit card transfer works by paying off your existing, high-interest credit card debt with the new credit card with the low introductory APR. A credit card transfer allows you to access a lower interest rate, save money, and pay down debt faster. 

There are usually always some types of terms and conditions attached to the 0% APR promotional period. And some credit card companies will even charge you a transfer fee for moving your balance.

There’s a lot more to credit card transfers and how they work. Keep reading if you’re still confused about the answer to, “What is a credit card transfer?” 

Do credit transfers hurt credit?

Not necessarily. The credit card transfer itself won’t hurt your credit score. However, a credit card transfer only works if you have access to a new credit card with a low introductory APR. 

This means you’ll have to apply for a new credit card first, which entails a hard inquiry on your credit report. This could dampen your score for a short period of time, so prepare for this possibility. 

Should I close my credit card after a balance transfer?

In short, the answer is no. You should never close credit cards. Closing a credit card shortens your credit history and lowers your credit utilization score, which is the amount of credit you’re using compared to your total limit. This can harm your credit score. 

How much does a balance transfer cost?

Some credit card companies will charge you a transfer fee for moving over your credit card balance. This transfer fee is typically 3% to 5% of the total amount you transfer. 

Is it a good idea to do a balance transfer?

If your interest rates are high and you’re having a hard time paying down credit card debt, a balance transfer can be a great way to save money and get out of debt faster.  

Just make sure to pay off your entire balance before the promotional period ends, or else you’ll end up with high interest rates all over again. You’ll also want to refrain from racking up additional debt onto your new credit card. 

Unfortunately, balance transfers aren’t available to everyone. Only those with good credit scores can qualify for a new credit card with a low APR. 

If you’re considering a balance transfer, but you don’t have excellent credit, try focusing on improving your credit score in the meantime. 

Paying down credit card debt with Credit Builder Plus

MoneyLion’s Credit Builder Plus membership features a credit builder loan that’s designed to help you boost your score fast. Here’s how! 

Step 1: Apply without risking a hard credit check

Normally, applying for credit puts a short-term dent in your score. But this isn’t the case with a MoneyLion Credit Builder Plus loan. There’s never a hard credit inquiry, so you won’t have to worry about your score being negatively affected. 

Step 2: Receive funds upfront

You can apply for up to $1,000 at a competitive APR and receive a portion of your funds upfront. The rest of your loan money is held in an interest-earning Credit Reserve Account, ready to be unlocked once you’ve paid off your initial balance. 

Step 3: Set up automatic payments

Connect your account and set up an automatic repayment schedule. It’s the easiest way to ensure your payments are consistent and on time. Making regular, timely payments is the most important thing you can do to boost your score. 

Step 4: Monitor your credit score

MoneyLion’s Credit Builder Plus membership features a host of tools to help you monitor your credit score. You’ll receive free, weekly credit score updates and helpful tips. 

Step 5: Watch your credit score soar

Over time, making consistent payments will boost your credit score. More than half our members raised their score by up to 27 points within 60 days!

Manage debt by boosting credit score

Your credit score is strongly linked to how well you manage debt. If you have poor credit, you’ll be stuck with high interest rates and unfavorable terms that will make it even more difficult to pay down debt. 

If you’re going to take advantage of top debt repayment strategies, like a credit card transfer, you’re going to need excellent credit. You can use a Credit Builder Plus loan from MoneyLion to boost your score and even transfer a portion of your debt onto our low APR loan. 

Ready to learn more? Get started with MoneyLion’s Credit Builder Plus membership here.

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