One attractive feature of credit cards is that you can transfer the balances on different credit cards to a single card. This feature sometimes comes with a balance transfer fee depending on the amount you have transferred. Sometimes, a company introduces a new credit card with zero transfer fees but this may be a limited time offer. But you can only transfer the amount that your new credit card limit allows.
One benefit of consolidating balances is you can transfer your card balances and save money in terms of the interest charges you pay. Suppose you have 3 credit cards, in this way, you will be paying interest on all those cards. But if you transfer all the balance, you will pay interest only on one card. Some cards allow you to pay zero interest if you pay within the given time limit. Consolidating is only beneficial if you end up paying less including all the costs so go for the card that is offering lowest interest rate.
Consolidating credit card payments also helps you to keep a good credit score history. Consider how poorly having many old cards will affect you credit score instead of having just one. It is because, when making your credit score report, companies take into account all the new and old cards you have in your name. You make a single payment monthly in time and you are building a very good credit history.
Another benefit of consolidating credit cards is the simplicity it will bring to your life. Consider having multiple credit cards; you will have to manage timely payments of all the cards, avoiding late payments and keeping track of all the risks and rewards you can get using all these cards. Instead, if you have only one card, you will be making just one monthly payment and that’s it. So one benefit of consolidation is you transfer your card balances and save time. You will remember exactly when the payment on this single card comes due and your life will become much simpler. This also reduces stress that comes with keeping track of all the card payments that come due. One thing to keep in mind is you do not become over confident that you only have to make single payment. This may stimulate you to make unnecessary purchases and end up in more debt.
Transferring the balances into one card is not limited to just your credit card. You can transfer almost every type of outstanding credit to your card. But one limitation is the amount you can transfer. You can only transfer the amount this card limit allows you to. Suppose, if you have a total of $1000 credit outstanding but your card has a limit of $500, you can only transfer $500 to this card.
If you are getting a 0% interest on transferred balance, it does not mean that this 0% interest rate will be applicable on the purchases you make with this new card. You need to know clearly what interest rate the company charges on buying with this card.