What are the Pros and Cons of an Instant Balance Transfer?

Instant balance transfers allow a person to transfer debt, usually credit card debt, from one creditor to another. While many people view instant balance transfers as entirely positive, there are both pros and cons to taking this option. On the pro side, a person who opts for an instant balance transfer may obtain a significantly lower interest rate on the money he owes, enjoy a small credit boost, and have more credit available to him. As far as the cons are concerned, 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. Additionally, if he makes purchases using the credit card from which he transferred the balance, he may even end up with more debt to pay.

In many cases, an instant balance transfer benefits an account holder by allowing him to pay down his debt faster and at a lower interest rate. For example, a person may have a difficult time paying off his credit card debt at his 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 of time or even zero-percent interest. With low or no interest to pay, the account holder may be able to pay the principal on his debt faster and eliminate the debt sooner.

An individual who accepts an instant balance transfer may also benefit from the additional credit he may gain from the transfer. In some cases, the new credit card company will give him credit above the amount he transferred. Additionally, the individual may keep his original account open and have that credit available to him as well. Some people might use the credit on the original card to take care of expenses or even to go on vacation. Making new charges on the original credit card may only benefit the account holder if he can pay them off before he incurs interest on it, however.

Usually, the cons of an instant balance transfer involve the cost of transfers and the potential for losing the introductory interest rate. For example, some credit card companies charge hefty transfer fees. If the account holder misses a payment, he may also lose the introductory rate and have to pay less-than-optimal interest on the transferred debt. Additionally, if he racks up more charges on his original card, he may find it even more difficult to pay down his debt.