Balance Transfer Credit Cards Benefits
For someone who is looking for a way to get out of debt, balance transfer credit card can be a good option for him. It allows the holder to transfer the balances without getting charged and at the same time getting lower interest rate on the transferred money. This will help him to, potentially, save a good amount of money.
Balance Transfer Fees
Usually, most credit card companies charge certain fees for balances transfer between different credit cards. The fess most of the time is calculated on certain percentage from the transfer amount, it can be 2% or 3%. They will also set a minimum limit, let’s say $5 and the maximum limit, maybe $100 maximum transfer. However those numbers can be different among each credit card. From the illustration above we can see that the cost for this transfer may add up that can negate the balance transfer benefits.
With balance transfer credit cards, these fees are waived. Depending on the card, these fees may only be waived for a certain period of time. Sometimes, balance transfers need to be initiated at the time of applying for the card in order to have the fees waived. With other cards, the balance transfer may need to be completed within the first six months or within the first year in order to be eligible for waived fees. Yet other cards never charge fees for balance transfers because they are more than happy to take on a debt and receive the subsequent finance charge payments. In fact, if you negotiate with a card that has balance transfer fees, you might be able to convince them to drop the fees. After all, allowing you to transfer your balance to their card does make money for the credit card company in the long run.
Finance Charges
Another obvious benefit of a balance transfer credit card is the low interest rates. The best balance transfer credit cards will have a 0.00% APR for the life of the balance of the transfer. This means you will not pay interest on the transferred balance – ever. Even after the interest rate goes up on other charges made to the credit card, your transferred balance remains interest free.
When comparing balance transfer credit cards, you need to take a close look at the interest rate. Some balance transfer credit cards offer the low interest rate for the life of the balance while others do not. Be sure to find out how the interest rate is determined after the introductory period is over. Also, make sure you are fully aware of what you need to do to be eligible for the low introductory rate. With some cards, the balance transfer needs to be initiated when applying for the card in order to be eligible for the lower interest rate. With other balance transfer credit cards, you have the luxury of transferring the balance any time during the introductory period, which generally lasts anywhere from a few months to a year.
Consolidating Debt
Another perk of balance transfer credit cards that many people fail to consider is the fact that you can consolidate your debt on these cards. Having all of your debt in one place makes it easier to keep track of your finances and make payments. In addition, you can save a great deal of money by putting all of your debts on one card with a low interest rate as opposed to having it spread out over several high interest cards. Just avoid the temptation to continuously open new accounts with balance transfer credit cards, as having a large number of open credit card accounts can reflect negatively on your credit rating.
Related posts:
- Chase Credit Card Application Status There is no doubt that over the past years credit...
- Finding The Right Credit Card Just Got Easier So you have decided to apply for a credit card?...
- Effective Debt Management by Choosing Credit Cards Properly Credit cards are indeed considered as one of the "miracles"...
- What You Must Know About Reducing Your Credit Card Debt Minimize credit card debt and eliminate it now before it...
- What Should You Consider When Getting a Credit Card? When youre trying to decide between several different credit card...