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Most people ignore the credit card offers they get in the mail every week… but maybe you shouldn’t. After all, some of those offers might come with 0% introductory APR, 0% fee balance transfers, and other advantages that can help you manage your credit card debt.
Knowing how to take advantage of a 0% credit card offer is critical if you want to protect your credit score and make the most of these opportunities.
We’ll cover some of the details you need to handle balance transfers and make sure your credit card debt, and your credit score, are well taken care of.
What Are Balance Transfers And How Do They Work?
Before we dive into what you need to know to take advantage of 0% credit card offers, you need to know what a balance transfer is.
With a balance transfer, a bank or credit card lender buys the debt off of a different credit card, transferring the balance to your account with them instead of the other card. Most of the time there is a small percentage fee to make a balance transfer, often about 3-5% of the total balance.
Banks are willing to accept balance transfers because they get the profits from the interest on the debt, making it a profitable option. The previous debt holder is often also happy to allow the transfer since they can get rid of the risk that the debt won’t be repaid.
Using balance transfers effectively can help lower your interest rates and make it easier to pay off the debt.
Plus, consolidating your debt into a single account lowers your total interest payments and looks better on your credit score.
Can Balance Transfers Lower Your Credit Score?
Yes and no. If you handle your balance transfers well and take advantage of 0% credit card offers effectively, your credit score won’t go down. In fact, balance transfers can even help your credit score go up if you’re able to pay off your debts faster.
However, too many balance transfers too quickly, or opening a lot of new accounts to complete balance transfers, can make your credit score go down. In some cases, you might even be refused a balance transfer if it looks like you aren’t managing the debt well.
Is Transferring Multiple Balances Onto A 0% Card A Good Option?
Using balance transfer offers to consolidate multiple debts into a single account can be a great way to manage your debt. While that one account will take longer to pay off, you’ll only be accumulating interest on a single account.
Consolidating can actually lower how much interest you’ll need to pay back.
Another advantage of consolidating debt by transferring it into a single account is that your minimum payments may be lower. That means that you’ll have more extra money to spend on the account or to manage the rest of your finances.
How To Protect Your Credit While Making Balance Transfers
The first step to protecting your credit score while taking advantage of 0% credit card offers is to look at all the fine print for the new credit card, and any existing debt you have.
A good introductory offer can sometimes disguise a bad credit card offer overall. You don’t want to be stuck with a higher interest rate than you had before at the end of the introductory period, so make sure you know that the card works to your advantage.
You also need to check and make sure there aren’t too many additional fees or costs with your current debt holder. Banks like to hold on to certain kinds of debt, so they may charge you for balance transfers that move the debt out of their accounts.
It’s important to look at your own payment history as well. You may need to spend a few months catching up on payments and developing a good payment history to qualify for balance transfer offers.
Lastly, look at how much of the debt you can pay off during the introductory period after a balance transfer. This is the cheapest time to pay off the debt since you won’t have to worry about interest. If you can pay off the full debt during the introductory period that’s a good sign that you should move forward. But even if you can only pay off half of the debt, or even just a third, it still might be a good idea.