Do you want to reduce the amount of interest you pay on an existing loan? A credit card with a 0% interest rate for a given period of time could be a useful way to achieve this goal.
Money transfer credit cards allow you to transfer existing non-credit card debt and benefit from a lower interest rate for a given period of time. This could help you repay your loan faster and improve your financial situation.
As always, there are a number of things to consider before getting a bank transfer credit card and potential pitfalls. Read on to find out more about them, as well as why a bank transfer credit card might be useful.
How does a money transfer credit card work?
A credit transfer credit card works in the same way as a credit transfer credit card. In other words, the existing debt is transferred to a new credit card with a lower interest rate, sometimes 0%, for a given period. However, the transfer is often paying. These fees are often less than the amount of interest saved. As a result, you can often save money globally through a credit card with balance transfer or bank transfer.
The difference between a money transfer credit card and a balance transfer credit card is that it can only be used to transfer an existing credit card debt. With a bank transfer credit card, the money can be paid into any account and used to pay off, for example, a personal loan.
For example, an individual may have a personal loan of £ 5,000 with an interest rate of 7.5% and making a payment of £ 200 per month. Currently, it is possible to obtain a money transfer credit card with a 0% interest rate for 28 months, but charging a 3% fee for a transfer. Obtaining such a card could allow the borrower to repay his loan three months faster, saving him £ 287 in interest after fees.
Although the use of a credit transfer credit card can reduce interest payments during the 0% period, the interest rate can return at a relatively high rate. Thus, borrowers who do not repay their loan at the end of the interest-free period may end up paying a higher amount in interest than if they had stayed with their original loan.
In addition, some lenders charge a fee to settle an advance loan. It is important to consider fees before considering how much you can save by getting a credit card with wire transfer.
Money transfer credit cards can offer low interest rates on transferred debts. However, the interest rate applied to new purchases may be higher than for other credit cards. Therefore, it is worth shopping around to make sure you get the best deal. It may even be worthwhile to have a different credit card for everyday use.
To take away
A bank transfer credit card can be a useful way to transfer an existing loan at a lower interest rate, up to 0%. This can allow you to repay an existing debt faster and reduce interest payments.
However, it is essential to take into account all fees when calculating the obtaining of a money transfer card. It is also prudent to repay the loan before the end of the 0% interest rate period, as money transfer credit cards can impose high interest rates on new purchases.
Whether you’re looking for rewards, cash back, 0% interest, or a credit card to help you establish your credit, our list of the best credit cards contains cards that may be right for you.