“How to Effectively Use Balance Transfers on Existing Cards”

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Consumer Credit and Finance Education

At O1ne Mortgage, we prioritize consumer credit and finance education. This post aims to provide an objective view to help you make the best decisions regarding balance transfers. For more information, see our Editorial Policy.

Should You Do a Balance Transfer to an Existing Card?

Completing a balance transfer to a credit card with an existing balance can be a smart move, but it’s essential to explore all your options and understand the offer’s fine print before making a decision. Often, people opt for a new balance transfer credit card with an introductory 0% APR offer. However, if you receive a low-interest balance transfer offer on an existing card, consider the terms before proceeding.

Pros and Cons of Balance Transfers to an Existing Card

Pros

• No new hard inquiry for applying for a new card: By transferring a balance to an existing card, you avoid applying for a new card.
• Potential interest savings: Your existing card may offer a lower balance transfer APR, allowing you to save on interest for several months.
• Known credit limit: With an existing card, you already know your credit limit.

Cons

• Limits on which cards you can transfer: Generally, you cannot transfer a balance from one card to another from the same issuer.
• Potential to miss out on an intro 0% APR: New cards often offer 0% APR for a set period, which you might miss out on with an existing card.
• Increased credit utilization rate: Transferring a balance to an existing card can increase your credit utilization rate, potentially harming your credit score.

What to Consider Before Using a Balance Transfer

There are several factors to consider when deciding on a balance transfer:

• Your credit limit and current balance
• The ongoing APR
• Balance transfer fees, balance transfer APR, and the duration of the fixed-rate interest period
• The maximum amount you can transfer
• The issuer of the card offering the balance transfer (you generally cannot transfer a balance from the same issuer)

Consider how much money you could save after accounting for interest and fees. Explore alternatives to a balance transfer, as there is no one-size-fits-all solution for paying off high-interest debt.

How to Complete a Balance Transfer to an Existing Card

Follow these steps to complete a balance transfer:

1. Decide how much you want to transfer, including the maximum amount permitted.
2. Understand the terms and fees, including the balance transfer fee and the duration of the promotional APR.
3. Initiate the transfer. Your card issuer will send checks to your creditors or to you to pay off the balances, typically within five to seven days.
4. Make a plan to repay the transferred balance before the promotional interest rate ends. Consider setting up autopay to avoid late payments, which could result in losing the promotional rate.

The Bottom Line

Using an existing credit card for a balance transfer can be beneficial, but it may not be the best option for everyone. A new credit card with an introductory 0% rate, a debt consolidation loan, or a debt management plan might be more suitable for your financial situation. An existing credit card offers the advantage of already knowing your credit limit and the maximum you can transfer. However, you may not get terms as favorable as a 0% introductory rate on a new card. Do the math to determine the best option for you.

If you have any questions or need assistance with mortgage services, call O1ne Mortgage at 213-732-3074. We’re here to help you make the best financial decisions.

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