Balance Transfer
Credit Cards Are Efficient Money Savers
With competition heating up in the
credit cards market, banks and other lending institutions are coming up
with new schemes regularly to lure the customers into buying their
products. Balance transfer credit cards are among such interesting
options available to the customers.
Offers On Balance Transfer Credit Cards - Most balance transfer
credit cards offer 0% balance transfer deals. It means you can transfer
the balance from your existing high interest rate credit card to a new
balance transfer credit cards that offers you a better Annual Percentage
Rate (APR). For instance, let us assume that your old card was charging
you an APR of 27.9% and had an accumulative balance of $2000. In these
circumstances, your monthly payment would be $300. If you failed to pay
these dues within six months, you would end up paying $494 as interest
and continue to owe $694 to the lender. However, the amount due will be
$200 if you choose to transfer this amount to a new card through a
balance transfer deal. This way, you can enjoy a saving of $494.
Most lending companies offer 0% interest on balance transfer credit
cards for a stipulated time that generally varies from six to nine
months and in some cases even up to a year. Within this period, you can
transfer balance from one card with high interest to another with no
interest at all. This can help you save substantially. This can be a
great savings if you have large credit card dues or debt.
Besides the 0% balance transfer, there is another product called 0%
super balance transfer credit cards available in the market. This
financial instrument allows one to clear debts other than those related to
credit cards. In this type of deal, the amount of balance transfer comes
directly into your savings account. Thereby, you can place your credit
limit in a high-yield account. Once the 0% interest period is over, you
can take the cash and use it to repay the original lender and clear the
credit card debt. Even while your cash is deposited with the savings
account, you will have to continue paying the minimum payment dues set
by the credit card issuer; the minimum payment is generally 2% of the
balance outstanding or minimum $5.00.
Balance Transfer Credit Cards: Understand The Implications
-
Balance transfer credit cards are simple and anyone with a decent credit
rating can get one. However, like all other financial products, they
have their own upsides and downsides. A balance transfer deal serves as
a great money saver for those who can get their spending under control. If you can curb your spending, balance transfer credit cards give you
sufficient breathing space. Now, you can take care of the principal
repayment besides the interest on the outstanding loan.
However, if you find it difficult to resist your temptation to spend,
balance transfer deal is not the right option for you. Many people
give in to spending if there is space available on their credit cards.
Credit cards in general and balance transfer credit cards in particular
can be effective means to take control of your debt situation and manage
your personal finances. However, you need to assess your limits as
well as weaknesses to use it effectively.
Balance Transfer Credit Cards: Tips For Searching Out The Right Deal -
To get a good deal for balance transfer credit cards, it is advisable
that you take your time for doing some basic research and compare the
products offered by various banks and card issuing institutions. If you
want to change the credit card you use to one with the 0% interest for a
particular period, you need to double check the APR after the free
period is over. In this way you can check if the APR remains low
compared with your last card. Otherwise, you end up paying more than you
earn. You can opt to switch over to another card and use the balance
transfer facility in the similar fashion if the APR after the free
period is not reasonable.
Most importantly, do not use balance transfer credit cards to make
purchases. However, you will have to ensure that you do not spend on the
credit card. Otherwise, you'll eat into the profits that you made by
balance transfers, which could fail the entire purpose of availing such
a service.
You can easily find providers offering balance transfer services. To
avail this service, you will only have to pay charges required for
transferring the credit limit to your bank account. Most companies
charge 2% of the amount or maximum $50 as fees. However, some new
companies charge less. What are you waiting for; get your balance
transfer credit cards now!
