BALANCE TRANSFERS
Credit
card balance transfer involves using a credit
card to pay off the amount outstanding on one or more
credit/store cards. The total debt then moves to one
card.
The main benefit of balance transfer is a money-saving
one. In the competitive credit card market an increasing
number of companies are offering a 0% interest rate
for a fixed period on balance transfers made by new
customers. This allows new cardholders to make considerable
savings in interest repayments. Interest free periods
vary and certain credit card issuers extend the 0%
interest rate offer to cover new purchases, it is
worth taking great care to compare
balance transfer offers well before deciding which
one to choose.
Some companies offer lower than average interest rates
on transferred balances for the life of the balance
transfer. This may be good news for card users who
are not planning to pay back credit card debt in the
short term.
Transferring credit card balances is usually a simple
process. Once a card application is approved it usually
involves a phone call to the new card issuer to transfer
the balance(s) from the other card(s). Many credit
card companies also offer an on-line service, making
it even easier to transfer balances via the Internet.
There is usually a ‘window’ of time after
a new card is approved during which balance transfers
attracting the promotional interest rate must be made.
A word of caution regarding balance transfers. Minimum
monthly payments still need to be made. Fall behind
with minimum payments and fines can be made and interest
free offers withdrawn. The same can happen if credit
limits are exceeded.
In a market full of balance transfer deals, offers
vary greatly. It is important to double-check the
details carefully before signing on the dotted line.
For example:
Before taking up a balance transfer offer, also take
time to consider the amount you need to move and how
much you intend to pay off and purchase each month.
That way you can be sure that you choose the right card
for you.
