You can often transfer credit balances from one lender to another, depending on the nature of the loan. You can open a home equity loan or personal loan to pay off the balance on another bank loan. Credit card providers often offer balance transfer promotions to entice consumers to move balances from one card to another. You might get a 0-percent, six-month offer, for instance, which means you don't pay interest on the transferred balance for a period of time.
Pros And Cons
Balance transfers have pros and cons. The benefit is that you could save money in interest over time and may lower your monthly payment. Some people use a transfer to a home equity loan or line of credit to get a better long-term interest rate than you typically do with unsecured loans or credit cards. However, you may have to pay an upfront finance fee of 3 to 5 percent of the transfer amount. Additionally, if you consolidate credit card debt with a transfer to an equity loan, you may still have bad spending habits that contribute to the build-up of more credit card debt.
Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.