Card holders can profit from credit card balance transfers several ways.
For qualifying individuals the transfer could be viewed as a short-term credit card loan at 0% interest in some cases, but only if the principal is paid back in full when due.
First, transferring balances to a lower-rate credit card can drastically reduce the monthly payment you pay on your outstanding balance, which means more money in your pocket.
As a promotional tool credit card companies often charge introductory below market interest rates, for a limited-time only, on their balance transfer offers.
Some even go as low as 0% APR:
- Discover Card for 9 months
- GM Flexible Earnings for 12 months
- Citi Platinum Select for 12 months
- Chase Elite and Premium for 12 months
- Palms Platinum Access for 6 months
- Capital One Platinum for 10 months
- HSBC Platinum for 12 months
The above balance transfer offers may change at any time at the bank’s discretion, so be sure to check with these banks to see if the rates still apply.
Second, transferring balances can give you access to perks that you currently do not enjoy, such as no annual fee, a longer payment grace period, cash back on purchases, reward points, etc.
Thirdly, you may even get a larger line of credit than you currently have.
This amount you are able to transfer varies greatly with each institution, so ask the bank how much you can transfer before making any decision.
It may be less than you need, or you be pleasantly surprised and get a more generous spending than what you expected.
Fourth, you may be able to consolidate all of your credit card debt into one, single low monthly bill, instead of keeping track of multiple accounts with different due dates, and getting stuck with a late payment that could affect your credit score.
Fifth, you might even be able to put excess funds into interest-bearing accounts and make money by paying zero-interest on the credit card balance transfer and getting interest from your bank accounts.
Check with the issuing bank if any portion of the balance transfer can be deposited into a personal savings or checking account, because generally balance transfers cannot be deposited into a financial institution at the low balance transfer rate.
On this you have to really be careful the credit card bank does not treat the balance transfer as a cash advance and charge you very high cash-advance rates, plus fees on top of that.