Instant balance transfers can help pay off debt faster with lower interest rates and extra credit, but may incur transfer fees and lose introductory rates if payments are missed or new charges are made on the original card.
Instant balance transfers allow a person to transfer debt, usually credit card debt, from one creditor to another. While many people find instant balance transfers to be entirely positive, there are pros and cons to taking this option. On the pro side, a person who opts for an instant balance transfer can get a significantly lower interest rate on the money they owe, enjoy a little credit boost, and have more credit available to them. As far as the drawbacks go, a person who opts for an instant balance transfer may incur balance transfer fees and receive a less than optimal interest rate if he misses a payment. Also, if he makes purchases with the credit card he transferred the balance from, he may even end up with more debt to pay.
In many cases, an instant balance transfer benefits the account holder by allowing them to pay down their debt faster and at a lower interest rate. For example, a person may have a hard time paying off their credit card debt at their current interest rate. To pay it off faster, he may accept an instant balance transfer offer from another creditor. This creditor may offer the account holder very low interest for an extended period or even zero percent interest. With little or no interest due, the account holder can pay off their debt principal faster and eliminate debt sooner.
A person who accepts an instant balance transfer can also benefit from the extra credit they can get from the transfer. In some cases, the new credit card company will give you credit in excess of the amount you transferred. In addition, the individual can keep her original account open and have that credit available to him as well. Some people can use the credit on the original card to cover expenses or even go on vacation. However, making new charges on the original credit card can only benefit the account holder if he or she can pay them off before interest is incurred.
The disadvantages of an instant balance transfer typically involve the cost of transfers and the possibility of losing the introductory interest rate. For example, some credit card companies charge high transfer fees. If the account owner misses a payment, they may also lose the introductory rate and have to pay less than optimal interest on the transferred debt. Also, if you rack up more charges on your original card, you may find it even more difficult to pay off your debt.
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