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Balance Transfers Explained

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If you think you are paying too much interest charges on your current credit card, then perhaps it’s time to take advantage of balance transfers. When you move the amount of money you owe from your current card to another card that promises more manageable rates, you may be able to pay off your loan faster and manage your monthly cask flow better.

Look for “Introductory Zero Percent”

Most balance transfer deals offer 0% interest, often limited to a certain “introductory period” that usually lasts often six months. Once your application for a balance transfer is approved, you are typically given 6 weeks to transfer your balance from your old card to your new one, for as long as the balance is within the credit limit of your new card. This means that you no longer owe anything on your old card.

During the introductory period, you will not have to pay any interest on your debt. All the repayment you make will be applied directly to your balance. When the introductory period lapses, you will start to pay the new interest rate (usually a standard, pre-arranged rate).

Watch out for Balance Transfer Fees

To make money from the transfer, most credit card companies charge a balance transfer fee. The rates vary, but most banks charge about 2%. Always read the terms and conditions from the credit card issuer before you sign up, because that seemingly small 2% may turn out to be a lot of money. The terms and conditions are not always detailed in the brochure or application form. Check the bank’s website to be sure.

Taking full advantage

Balance transfers can really save you a lot of money, but only if you know how to take advantage of it. The best thing you can do is to NOT use the cars for any other purchase until you have fully cleared your debt. This way, you avoid interest completely. Also, if you can pay off your debt within the introductory 0% period, you don’t have to pay any interest.



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Featured Articles:

MANAGE YOUR MONEY: USE YOUR CREDIT CARD WISELY

Like majority of things in life, credit cards give us power that we could use to maximize our way of living. We should learn to use it wisely to avoid any hassles in the future.

But what are really the advantages of having a credit card? We, at comparecreditcards.com, did a survey about the merits of having a credit card and you will be surprised at what came out…

It is a lot easier to buy things with a credit card. It gives you purchasing power that can let you buy things without you having to carry huge amounts of cash around.

You get added security if in case something you bought got lost, stolen or damaged. With both your credit Card Company and your credit card statement guaranteeing you made the purchase, you could actually get insurance on whatever you bought.

Having a good credit history not only helps you apply for a new credit card, but also helps you build a solid financial foundation when applying for other things like loans or sometimes even jobs.

Although we should avoid any expenses that is way out of our budget, it is sometimes unavoidable due to emergencies like fire, floods and the like. But the worst thing is it leads to large purchases in huge amounts of money. With a credit card, you can use money with cash advances and worry about paying it later once you’re back on track.

In addition to those, a credit card also presents further benefits like discounts, free air miles and insurances. But you have to remember that credit card companies start making money once you can’t afford paying off your charges!

The benefits of having a credit card are real and are very helpful on the condition that you take into account your spending limits.

Life is made easier with a credit card, but if used unwisely, they become financial break downs for you. If you do decide to get yourself a credit card, keep in mind these following rules:

  • Track all of your purchases.
  • Never spent beyond your budget.
  • Settle your balance at the due date.

Always bear in mind the responsibility of having a credit card. Spend within your budget and use it wisely.