Credit card debt has declined due to the coronavirus pandemic, with total revolving debt falling from $ 1.0942 trillion at the end of 2019 to $ 992.4 billion in June 2020, according to the Federal Reserve.
Part of the reason is that spending fell because budgets tightened during the economic downturn that followed. But another reason is that credit card companies are lowering credit limits for existing customers and tightening their underwriting criteria for new applications, making it more difficult to approve a card.
If you want eliminate credit card debt, however, a balance transfer credit card could be the key (and help you save hundreds of dollars in the process). Here’s how to get a balance transfer card, plus some tips if you want to get rid of your credit card debt fast.
How do I get a balance transfer credit card?
Credit cards with balance transfer generally require good or excellent credit to get approved. According to FICO, a good credit score starts at 670. Just because you hit that minimum doesn’t mean you’re guaranteed to be approved. Card issuers will also look at your credit report, other debts, employment, income, and several other factors.
If you don’t know where your credit is at, check your credit score for free with a service like Experian or Discover Credit Scorecard. Also consider using an online marketplace like Credible to compare some of the best balance transfer cards side by side and choose the one that suits you.
Remember that there are a lot of advantages and disadvantages of credit cards with balance transfer.
What is the benefit of a credit card with balance transfer?
Credit cards with balance transfer offer a low introduction or even 0% APR promotions to eligible borrowers. These APR periods are often between six and 21 months long, which can give you plenty of time to pay off your balance without interest. Depending on how much you owe, these interest savings may exceed the value of a new credit card sign-up bonus.
Some of these cards even offer rewards on your purchases. Explore your credit card options by visiting Credible to compare.
Keep in mind, however, that many balance transfer cards charge an upfront balance transfer fee. These fees typically range from 3% to 5% of the transfer amount and are added to your balance after the transfer is complete. But in many cases, the interest savings make these fees worth it.
Should I consider an introductory 0% APR purchasing card?
As a result of the pandemic, many credit card issuers are no longer offering balance transfer promotions and are instead offering 0% APR offers on new purchases. This benefit may be worth it if you need to make a large purchase or have expenses that you can’t afford right now, but which can pay for themselves over time.
It is never ideal to keep a balance on a credit card, but doing so with 0% APR can provide much-needed relief over time. difficult financial period. However, this will not help you pay off your existing debt.
If you are considering a 0% APR credit card, visit Credible to see several 0% credit card options at once.
Is a personal loan a better option?
If debt consolidation is your top priority, you may also want to consider using a personal loan to achieve your goals. Personal loans allow you to use your funds for just about anything, including paying off other debts. In some cases, you can complete the application, process, get approval, and receive the money the next business day or even the same day.
On average, personal loans carry lower interest rates than credit cards, which can help save you money. Plus, unlike credit cards, personal loans have a fixed repayment term, which means you won’t find yourself in a minimum payment trap.
A personal loan for debt consolidation can be a good alternative to a balance transfer credit card if you are not eligible for it. However, there is no guarantee that you will get a better interest rate than the one you are currently paying. Plus, there are no zero percent personal loans, so if you have the discipline to pay off debt quickly, want to maximize your savings, and have good credit, a balance transfer card can be used. the best choice.
Credible can help you find the best personal loan rates, making it easy to compare all of your options based on your credit profile.
You can also use their personal loan calculator to run the numbers for your situation.
Should you apply for a credit card or a personal loan?
There is no easy way to determine if a request for new credit card or the loan is suitable for everyone. Take a close look at your current financial situation and the financial goals you’re trying to achieve, then think about how a credit card or personal loan could help you.
Also consider the costs of each option to make sure you find the cheapest way to meet your needs. Remember that if you have subprime credit, your options will be limited and you may need to address credit issues before you apply.