Last Updated on April 9, 2023 by Tabraiz
Pay off your existing balance with another credit card is a difficult task. Credit card to credit card payments does not reduce debt. Rather, they move the debt from account to account. Fortunately, there are two strategies, including balance transfers and cash advances which requires paying just your monthly payment to repay a credit card.
What Does Balance Transfer Refer To?
Balance transfers work by applying for a promotional credit card with an introductory APR, initiating a balance transfer, and paying it down. It may be smart to transfer your balance to save on interest charges. The balance transfer feature is not available on all credit cards.
How does a balance transfer credit card work?
As the name suggests, a balance transfer credit card helps you carry out a balance transfer. Choosing a smarter credit card with advantages is the key goal. This helps you to pay the money conveniently with lower costs.
Benefits of Balance Transfer
Interest-Free Introductory Periods
Different financial institutions may offer you an introductory period of 6 months to 2 years to transfer your balance. This is a convenient way to pay the additional amount without fees or interest.
Introductory periods can save you money on your monthly payments if you need to repay a large amount. Payment delays will result in the loss of introductory or promotional interest rates. Due to the missed payment, you may be charged a penalty. It is, therefore, wise to read the terms and conditions before transferring a balance.
They Can Save You Money
Do you know that transferring money to a different account might work in your favour? Some credit bureaus offer reasonable APR rates. It allows you to pay off debt with a lower interest rate, saving you money. With free introductory periods and APRs, you can transfer money when dealing with high-interest rate repayment problems.
Better Rewards Programs:
You can earn rewards and enjoy perks with different credit cards. When choosing the right credit card, such benefits might make a difference.
Facts to Consider Before Choosing a Balance Transfer:
- Transfer fees- A fee is usually charged when you transfer your balance. If the fee is unacceptable, consider switching to a different credit card. In many cases, saving during the interest-free period is preferable to paying interest.
- You could be declined- Late payments and poor credit management can cause low credit scores. To transfer money, you must have a credit score of around 600.
What exactly is a Cash Advance?
The next step in pay off your money is the cash advance. You can borrow money against the line of credit on your credit card with a cash advance. Often, there is a fee associated with the service.
It is not the same as using your debit card to get cash. It does not come from your bank account. Instead, the amount is added to your credit card balance. A cash advance can come with fees and higher interest rates than typical credit card purchases.
Benefits of Cash Advances:
You Will Be Given a Lump Sum of Money Very Quickly
When you apply for a cash advance, you do not have to wait more than a week for the money to be deposited into your account. Cash advances come to the rescue when you need them the most.
You Do Not Need Perfect Credit
Merchant cash advances get approved faster than loans or credit cards. The application process is easier and simple. Fortunately, you can apply for this process even if you have low credit.
The applicant must make a minimum amount in monthly business credit card sales, which is the most crucial requirement for cash advance providers. This proves to the lender that you can make timely payments in advance.
Use the Money on Your Comfortability
Merchant cash advances are advantageous as they allow small businesses to use the money easily.
Things to Consider:
- It is costly– Cash advances have high-interest rates when repaid with other credit cards. The money does arrive in your hands, but it comes at a cost.
- Additional fees may apply– Different credit bureaus charge additional fees with cash advances. Do your math before agreeing to pay off debt with additional fees.
- It may not solve your problem– Using a cash advance may not solve your problem of repaying the debt. Using cash advances without proper financial calculations may lead to enormous expenditures.
Cash advances and Balance transfers might come to your rescue. However, you should make informed financial decisions. Commit yourself to better spending habits and avoid overspending. Keep a check on your budget, so you do not fall into heavy debt.