Balance Transfer Credit Card Affects Credit Score: Payday Loans Don't

Getting a zero percent balance transfer can be great for someone who uses them for that very purpose. Getting out of debt earlier than expected can be obtainable when you transfer a high interest rate balance to a zero percent credit card. Some credit card companies even extend the offer for up to 18 months giving consumers more time to pay off their balance. But are these offers good for everyone? There may be times when a zero percent balance transfer credit card is not the best option. It pays to consider your options when borrowing money whether it be via a credit card, a short-term payday loan, or from a family member. If you are considering transferring your credit card balances to a lower zero percent interest rate credit card, there are a few things you may want to consider beforehand.

First of all, consider how your credit score will be affected should you apply for new credit in an effort to obtain a zero percent interest credit card. While inquires impact your score only temporarily, if you are in the process of applying for a new mortgage, applying for another credit card could hinder your score as well as the outcome of getting approved for a home loan. It's best to wait until after you have closed escrow on your home to open any newlines of credit. Small-dollars title loans and cash advances don't require credit checks so if you are looking for quick cash, a payday lender may be your best bet.

Another consideration with a balance transfer credit card is the possibility of racking up more debt when you have a zero balance on the old card. If you are disciplined enough to payoff the old card with the balance transfer and avoid using it again, then you will be alright. If you think you may be tempted to use the card that you just transferred the balance from, then you may want to reconsider the idea.

How much are you wanting to transfer? If your balance is fairly low it may be in your best interest to keep the original card and focus on paying off the balance within a few months. If you're looking at a larger amount, say "5-10k, you will need to make sure you are able to get a card that will allow that much to be transferred. You could transfer to multiple cards but that can be a hassle when it comes to keeping your bills organized as well as covering 100% of what you want to transfer. You can transfer a portion of the balance of the original card or look into taking out a home equity line of credit. There is also the option of a personal loan if you feel confident you can make the payments. Short-term auto title loans, cash advances and payday loans are for temporary finances so you probably don't want to go that route.

Something else to think about when considering a zero percent balance transfer on your credit card are the transfer fees. Most cards charge a 3% transfer fee which can still be considered low compared to what you pay on your original card, but then again, how long will it take you to pay off the new card? If you balance is fairly low and you think you can pay it off within six months, you will still save money by transferring.

One last thing to think about, and perhaps the most crucial, is what kind of interest rate you will receive on the balance transfer credit card once the 0% offer expires. If you aren't able to pay it off before finances charges kick in, and you are assessed a higher interest rate than that of the original card, you may be creating a bigger problem for yourself. You want to think about the long-term ramifications of transferring your balance and weigh the numbers before you move forward.

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