A credit card balance transfer simply means moving ones debt from one card to another . It\'s often a good way to save money, as many credit card companies offer an interest free period on balance transfers to new customers . One can even consolidate the debts by transferring the balance from more than one card . Or, one might find a lower interest rate than what an individual is currently paying .
However, if the current card is issued by a high street bank or older more famous credit card company the chances are that one will be paying a very high rate of interest . If that credit card has an outstanding balance changing it to a balance transfer credit card could literally save an individual hundreds of dollars a year . Moreover if one has an outstanding loan, overdraft or other finance agreement one can pay off that debt with a credit card balance transfer and save money .
Modus Operandi
There are 2 different types of balance transfer offer. The first is a 0% offer for a specified period of time - normally 6 months . So while the balance is in this promotional period one would pay no interest on the debt . The trick with these offers is to use them wisely. If one takes a 0% offer for the first 6 months and then leave the balance on the card, one will save some money but one will pay a higher rate of interest afterwards .
The solution is, one need to be disciplined and apply for a new credit card with a promotional balance transfer every 5 months or so, so when one offer ends one can switch it to the new card and still pay little or no interest . The other option is to take a credit card that offers a balance transfer rate not for a certain period of time but for the life of the card . This is normally not 0% but around 4-6% APR. With standard rates on credit cards averaging 16-20% one will still save a significant amount of money. And the best thing about this is that one is not supposed to switch card every few months. It is also advised, one should be aware that any spending one does on these cards is normally charged at the standard rate of interest and anything one pays off on the card comes of the lower rate balance transfer first .
A Word of Caution
While opting for a credit card and having balance transfer option in mind, one should try to get satisfactory explanation regarding the following issue:
1. Size of the balance transfer.
2. Length of the interest free period on the balance transfer .
3. Existing credit card\'s interest rate .
4. Amount of money to spend on the card each month .
5. Amount likely to pay each month.
Make sure to read the small prints. For example, if there is not a 0% rate for purchases, one will have to pay interest on these at the standard rate .Any repayments done will go towards the balance transfer, so one will pay interest on purchases until one has paid the balance transfer in full . It may also have a \'minimum monthly spend\' clause
However, if the current card is issued by a high street bank or older more famous credit card company the chances are that one will be paying a very high rate of interest . If that credit card has an outstanding balance changing it to a balance transfer credit card could literally save an individual hundreds of dollars a year . Moreover if one has an outstanding loan, overdraft or other finance agreement one can pay off that debt with a credit card balance transfer and save money .
Modus Operandi
There are 2 different types of balance transfer offer. The first is a 0% offer for a specified period of time - normally 6 months . So while the balance is in this promotional period one would pay no interest on the debt . The trick with these offers is to use them wisely. If one takes a 0% offer for the first 6 months and then leave the balance on the card, one will save some money but one will pay a higher rate of interest afterwards .
The solution is, one need to be disciplined and apply for a new credit card with a promotional balance transfer every 5 months or so, so when one offer ends one can switch it to the new card and still pay little or no interest . The other option is to take a credit card that offers a balance transfer rate not for a certain period of time but for the life of the card . This is normally not 0% but around 4-6% APR. With standard rates on credit cards averaging 16-20% one will still save a significant amount of money. And the best thing about this is that one is not supposed to switch card every few months. It is also advised, one should be aware that any spending one does on these cards is normally charged at the standard rate of interest and anything one pays off on the card comes of the lower rate balance transfer first .
A Word of Caution
While opting for a credit card and having balance transfer option in mind, one should try to get satisfactory explanation regarding the following issue:
1. Size of the balance transfer.
2. Length of the interest free period on the balance transfer .
3. Existing credit card\'s interest rate .
4. Amount of money to spend on the card each month .
5. Amount likely to pay each month.
Make sure to read the small prints. For example, if there is not a 0% rate for purchases, one will have to pay interest on these at the standard rate .Any repayments done will go towards the balance transfer, so one will pay interest on purchases until one has paid the balance transfer in full . It may also have a \'minimum monthly spend\' clause
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