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You may have heard people talking about transferring their credit card balance to a new card, and of course you’ve received offers in the mail to do this, as well. But some people hold off on doing a balance transfer because they think they will end up paying more in the long run. While that is a very valid concern, you actually can save a lot of money if you pay off the transferred amount during the special, introductory zero percent interest period. That’s a huge reason to transfer your balance, but there are actually a number of other great reasons, too. 1) Credit cards offer a lower interest rate than many debt consolidation loans. In fact, some credit cards actually offer 0% APR balance transfer offers for the life of the balance, which means the interest rate will never change. Since it’s not accruing interest, you save a good amount of money. It’s also often easier to qualify for a credit card than it is for a debt consolidation loan. 2) No collateral is required. A debt consolidation loan will often require you to put up your house, your car, or some other major piece of property. If you are unable to make a payment, you risk losing your collateral. Yes, this means the bank could take your home or car if you’re late on a payment or two! A balance transfer to a credit card, however, is called an unsecured loan, meaning no collateral is required. This doesn’t mean you can miss payments, though—credit card companies may not be able to take your home, but they can send debt collection agencies after you. 3) You can combine multiple credit card payments. Instead of dealing with multiple payments, multiple interest rates, and multiple credit card companies, you can combine those payments into one by transferring the balances to one card. This simplifies a lot of things, plus you may be able to lower several interest rates at once. 4) It’s easy to do. Transferring a balance to a new credit card is very simple. Usually there are just a few more lines on the application to fill out. Once your card is approved, the balances are transferred automatically. If you want to transfer a balance to a card you already have, all it takes in a phone call or a few minutes on the card company’s website. 5) You can earn rewards. Most credit cards offer rewards for spending a certain amount or for transferring a balance. You may be able to earn cash back, discounts, or other types of rewards while lowering your interest rate and paying off your balance. Consumers can benefit greatly by lowering their rates and saving interest every month, most consumers prefer to try to find balance transfers zero interest promotions to maximize their savings and avoid interest charges.
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