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Transferring your credit card balance, or balances,
to a lower interest rate card can save you money.
Balance transfer credit cards are yet
another terrific way that the heavy competition among credit card
companies benefits us. These offers basically allow one credit card
company to steal your debt – via balance transfers -- from another.
Secretly, the company is hoping you won't pay it off, since they want
your interest payments, but that doesn't mean you have to comply.
The process is a tricky one -- there are a lot of possible fees,
penalties and 'catches' to beware of lest this move actually end up
costing you money.
It is also getting harder to do. Credit card companies are trying to
stop customers from leaving, and they are also trying not to gain
customers who are only there to take advantage of introductory rates
before they move on again.
This is one credit card move that absolutely demands you read -- and
understand -- all of the fine print. Different card companies handle it
in different ways and have a wide range of fine print containing a
myriad of rules.
But just because hopping from one card company to another is harder than
it used to be doesn't mean you can't do it. There are fewer and fewer
super-low teaser rates for balance transfers, but there are low fixed
rates offered for balance transfers (that's the card company's way of
getting you to bring your balance and stay). If you do not transfer to a
fixed rate (or even if you do because fixed doesn't mean fixed forever)
there are three figures of prime importance -- the rate you are getting,
how long it lasts and what it jumps to when that rate is over. With a
fixed rate you may not know when it will change, but there will at least
be a guaranteed period before it can change.
After you have those numbers, check out all of the related costs:
Does either company charge a fee for moving the balance?
Is that fee a flat sum or a percentage?
Does your old card company charge you another fee for terminating your
account?
What fees and rates does the new company charge for new customers for
new purchases?
Will both card companies notify you when the transfer is done?
Under what circumstances can the new company change the introductory
rate it gives you for your balance transfer?
Looking for a better credit card? Check rates in your area.
Beware of 'tiered' arrangements. These will let you transfer a balance
and give you some sort of interest amnesty or super low rate for a
period, and then there may be another rate or arrangement for some more
time, then a third (or even a fourth) rate. The trap here is that you
may start with a great arrangement and slowly find your deal getting
worse and worse.
When You Want to Consolidate to Save Money
Many credit card companies include 0% credit card balance transfers in
their introductory offers. This can be a big advantage if you have high
interest rate credit cards and can now qualify for cards with lower
rates and high limits. By moving balances from your old cards to a new
one with at least a six-month 0% credit card balance transfer, you can
save up to hundreds of dollars over the life of the offer. In some
cases, you can find such cards offering the 0% for 6-12 months. The key
here is to consider your options and to determine how you can best save
money with the offer you select. Obviously, the longer the introductory
rate is in effect, the more money you can save.
Why Should You Transfer Money?
It's all a matter of math. If you owe several thousand dollars on high
interest rate cards, it makes sense to transfer the balances to get a
break on the interest, even for a few months. In addition, if the card
you transfer to has a considerably lower interest rate, you will save
money the entire time you're paying off the combined balances. You"ll
find the totaled balances going down much faster when you use your 0%
credit card balance transfer option.
Have you got outstanding balances on your credit cards which are costing
you far too much?
One of the most popular types of credit card available is the 0% balance
transfer credit card. By transferring the balance from a credit or store
card you pay 0% interest on the amount transferred, usually for a period
of 6 months with some companies offering up to 9 months. You may pay a
little more in interest charges for an extended period but you'll save
money over the 0% balance transfer period. |
