Can someone explain what exactly a balance transfer is?

[DevoiriS]

Hi, Can someone please explain what a balance transfer is? Why would I want to do one? Are there fees? Are there repercussions when opening several credit cards? What should I be careful with? If there is a post about this, I don't mind the link being pasted here.

Thanks!

[AsherO]

1. Hi,

2. Can someone please explain what a balance transfer is?
3. Why would I want to do one?
4. Are there fees?
5. Are there repercussions when opening several credit cards?
6. What should I be careful with?
7. If there is a post about this, I don't mind the link being pasted here.

8. Thanks!

I numbered your questions to make responding easier (possible?), hope ya don't mind:

1. Hi!
2.. A BT is when you transfer an existing balance (e.g. the $500 you owe on your Amex SPG) to another card (e.g. your Chase Sapphire).
3. To lower your interest rates (by moving the balance to a card with lower APR), this is the typical use for a BT, for someone carrying balances Ch"V. Some people also BT to take advantage of a BT related promo.
4. Usually 3-5% (with a minimum of $5/10), but the fees are sometimes waived (or lowered) for new accounts or with special promotions.
5. I'm not sure what you're asking here. You can transfer balances to any new account you open up to the CL, but this isn't always the prudent thing to do as there are usually BT fees.
6. That's a very broad question, but here are a few: Transferring balances up to CL will hurt your utilization and thus adversely affect your credit score. Also, many BT promotions have to process by a certain date for the promo terms to be in effect, so make sure to leave enough time for the BT check to process by the receiving bank.
7. I don't know of one offhand.

8. YW!

[deusconsilio]

I numbered your questions to make responding easier (possible?), hope ya don't mind:

1. Hi!
2.. A BT is when you transfer an existing balance (e.g. the $500 you owe on your Amex SPG) to another card (e.g. your Chase Sapphire).
3. To lower your interest rates (by moving the balance to a card with lower APR), this is the typical use for a BT, for someone carrying balances Ch"V. Some people also BT to take advantage of a BT related promo.
4. Usually 3-5% (with a minimum of $5/10), but the fees are sometimes waived (or lowered) for new accounts or with special promotions.
5. I'm not sure what you're asking here. You can transfer balances to any new account you open up to the CL, but this isn't always the prudent thing to do as there are usually BT fees.
6. That's a very broad question, but here are a few: Transferring balances up to CL will hurt your utilization and thus adversely affect your credit score. Also, many BT promotions have to process by a certain date for the promo terms to be in effect, so make sure to leave enough time for the BT check to process by the receiving bank.
7. I don't know of one offhand.

8. YW!

Does a BT onto a newly acquired card count toward spend thresholds? E.g. Transfer onto the UA Explorer to meet the $1K spend?

[Barryg]

A reg balance transfer doesn't count towards spending threshold (on any cards that I've ever had). There is a forum, however, about vanilla and vanilla reload and amazon payments. I used to think a bt was a good deal, (lower 15% interest to 2% since the 3% fee for a  bt + 0% promotional APR for a year and a half). Now I started amazon-ing, mvd-ing, and vr-ing to have a gain on the transfer of credit since the same card with 0% bt have 0% apr.
Please spend/transfer responsibly...

[Yeki89]

no

[rockstarhockstar]

I numbered your questions to make responding easier (possible?), hope ya don't mind:




1. Hi!
2.. A BT is when you transfer an existing balance (e.g. the $500 you owe on your Amex SPG) to another card (e.g. your Chase Sapphire).
3. To lower your interest rates (by moving the balance to a card with lower APR), this is the typical use for a BT, for someone carrying balances Ch"V. Some people also BT to take advantage of a BT related promo.
4. Usually 3-5% (with a minimum of $5/10), but the fees are sometimes waived (or lowered) for new accounts or with special promotions.
5. I'm not sure what you're asking here. You can transfer balances to any new account you open up to the CL, but this isn't always the prudent thing to do as there are usually BT fees.
6. That's a very broad question, but here are a few: Transferring balances up to CL will hurt your utilization and thus adversely affect your credit score. Also, many BT promotions have to process by a certain date for the promo terms to be in effect, so make sure to leave enough time for the BT check to process by the receiving bank.
7. I don't know of one offhand.

8. YW!

Firstly, thank you!! Very good explanation:))
2, I recently got a Barclay's arrival and they sent me bt checks, is it smart to use the checks to pay a British airways card which was used to load serve and then use serve to pay the Barclay's card? My BAirways statement prints on the first and I don't want to have money on the account but I might not have enough time to go buy MOs or get the money on serve over to BAirways before the first.

[myb821]

Firstly, thank you!! Very good explanation:))
2, I recently got a Barclay's arrival and they sent me bt checks, is it smart to use the checks to pay a British airways card which was used to load serve and then use serve to pay the Barclay's card? My BAirways statement prints on the first and I don't want to have money on the account but I might not have enough time to go buy MOs or get the money on serve over to BAirways before the first.

NO! they will charge u large balance transfer fees.

[ckmk47]

Nicely done AsherO.
Always read the fine print.  Usually the relevant info is in a chart form.
What is the interest you'll be paying?
For how long will that rate last?
What are the balance transfer fees (that you'll be paying up front)?

[@Yehuda]

Not sure at all how this works, but someone I know has a relative (ya classic, right?) who takes advantage of BT offers somehow by taking the money and then investing it in "safe" money like mutual/bond funds until the BT offer expires, then pays off the credit card and keeps the money he made.

[myb821]

Not sure at all how this works, but someone I know has a relative (ya classic, right?) who takes advantage of BT offers somehow by taking the money and then investing it in "safe" money like mutual/bond funds until the BT offer expires, then pays off the credit card and keeps the money he made.

That is using cards that usually have 0%introduction BT fees and 0% interest

[ChaimMoskowitz]

That is using cards that usually have 0%introduction BT fees and 0% interest

0%/NBTF for short. 

[@Yehuda]

Anyone here do that?

[ckmk47]

Not sure at all how this works, but someone I know has a relative (ya classic, right?) who takes advantage of BT offers somehow by taking the money and then investing it in "safe" money like mutual/bond funds until the BT offer expires, then pays off the credit card and keeps the money he made.

He gets BT checks that can be deposited like cash.

[ChaimMoskowitz]

Anyone here do that?

Not much benefit to it these days. It does give you working capital if you need it.

[NYHeel]

I used rolling balance transfers to pay down a car loan. I got a $23,000 6% 60 month loan for a new car and paid off the loan with balance transfers. I had to transfer the balance about every 15 months but I was usually able to find no fee balance transfers in the beginning and then capped fee transfers towards the end. I probably paid about $200-$250 total in fees over the 48 months it took me to pay down the loan.

It's gotten a little harder now to find no fee or capped fee transfers these days, though. It was much easier when I first started it in 2008. Overall, I wouldn't really recommend balance transfers unless you actually have a balance you haven't/can't pay off in full. If that's the case you really need to look at your spending and try and cut back. But balance transfers can help you pay down your debt faster if used wisely.

[Boruch999]

Anyone here do that?

I am doing it now.  It's not for everyone, as interest rates are close to zero, so it's hard to see where your average guy would put it to cover the 3% fee. (or even 0% will slate, prob not worth the effort.)

Also, carrying a large balance is weighing down my CS about 70 points.

[@Yehuda]

I am doing it now.  It's not for everyone, as interest rates are close to zero, so it's hard to see where your average guy would put it to cover the 3% fee. (or even 0% will slate, prob not worth the effort.)

Also, carrying a large balance is weighing down my CS about 70 points.

My MF/BF mix right now is pulling in an avg of 7% since January. What 3% fee are you talking about the broker's fee or a BT fee?

[Boruch999]

My MF/BF mix right now is pulling in an avg of 7% since January. What 3% fee are you talking about the broker's fee or a BT fee?

I didn't say for no one,  just not for everyone. There is no arbitrage out there at the moment, so it's worth it only for someone with the ability to invest safely and with reasonable certainty.

My precious metals trading has netted about 20% since Jan.   3% BT fee.

[@Yehuda]

3% BT fee.

But isn't the idea to use the promos with 0% fee?

[Boruch999]

But isn't the idea to use the promos with 0% fee?

It is. It wasn't available to me at the time. I decided 3% was still worth it and I was right.