Pointers for Balance Transfers

A balance transfer can be an opportunity for you to pay down your credit card debt. In most cases you do a balance transfer because you are trying to obtain a lower interest rate or an introductory rate in which you pay a zero balance. You also want to have the longest amount of time for this balance transfer special rate. There are plenty of cards out there that offer such deals, but there are at least five things to consider before you make that decision. While it is a perk to get a reduced credit card balance to make it easier to pay it off there are still issues. There are several traps in these terms and conditions for these credit cards that you might not notice until it is too late.

First you should consider how long the rate is going to last. If you get a rate that will last for twelve months it could be worth the transfer. You should also consider the interest rate after the balance transfer period is over. For example if you can get 5% interest on a balance that will last the lifetime of the loan, but you only get a zero percent introductory rate on a different card you will actually save more, that is of course if you can’t pay it off in six months, by choosing the 5%.

What is the balance transfer fee? Most credit cards have a balance transfer fee of 2 to 3 percent. If you are transferring a small balance is this percent worth it? You need to calculate if the interest you will pay on the old card is going to be more or less than the fee you will be charged. There are some cards that may waive the fee, so look towards those options as well.

You also need to know the conditions of the deal. There are often hidden charges in the terms and conditions section of the credit card offer. You could miss something that would negate the agreement, such as if you miss one payment you would cancel the deal you have with the zero percent interest.

The interest rate for purchases is going to be different for balance transfers. You need to understand these different amounts. You could have a shorter introductory period for purchases while the balance transfer period will be longer. This means if you use the card for new purchases you could end up paying more for the balance transfer.

You also need to know when the rate will change. Once the period is over you are going to be paying interest. This amount should be mentioned during the comparing process so that you have no surprises.

Back To Financial News April 2008
Travel Rewards With Your Credit Card
APS and Prepaid Gold MasterCard
The Figures On Credit Card Balance Transfers
Pointers for Balance Transfers
Credit Card Interest
Credit Offers Limited
Executive’s Life Ruined by ID Theft
Getting Around Life’s Obstacles
How To Borrow A Grand
Paying for a Good Credit Rating
UK Debt and the Mortgage Industry
Abuse of Government Credit Cards
Asian Growth Helps UK
Banks Raising Funds Offers Hope
Darling and UK Banks Going Head to Head
Estate Agents and Card Fraud
Government to Help UK Banks
Insuring UK Gardens
Interest Rates Rising with Underhanded Techniques
Lost Luggage Insurance Removed
Overdraft Charges Increase Credit Card Balances
Prediction: 10 Percent Drop in Insurance Market
Rise in the Housing Market Prices
The Scams With Telephone Calls and Security Codes
UK Insurance Costs Rising