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Credit Card Balance Transfer |
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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. 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. 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. |
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