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Credit Cards
Credit Card Balance Transfer - Do You Need One?Tip! Floor -- The minimum rate possible on a variable-rate loan or line of credit, after any initial introductory rate period. For example, on a credit card with the Prime rate as its index, no matter how low the Prime rate drops, the rate on the line may never decrease below the stated rate floor. Credit card issuers keep on adding new features to credit cards to woo potential customers. A credit card balance transfer is one among them. You can transfer your outstanding card balance (or balances) from your higher interest credit cards onto a balance transfer credit card with a lower introductory interest rate. American Express was the first credit card issuer to adopted this strategy and other card issuers quickly followed suit. To understand the balance transfer process, you need to understand the various terms associated with balance transfers such as APR, annual fee, introductory rate and balance transfer fees. The annual percentage rate (APR) is the interest rate that a credit card user has to pay for carrying over a balance, transferring a balance from another card, or taking out a cash advance. Depending upon the specific card offer, some credit card companies will also charge an annual fee just for card membership. Unless the card has a significant rewards offer, you should avoid balance transfer cards that require an annual fee. An introductory rate is a special annual percentage rate (APR) for a limited time. If you have a good credit history, you may get the benefit of low introductory rate for a longer period than cardholders with poor or suspect credit histories.
Transferring your Credit Balance As long as you pay credit card balance in full each month, you should not have to bother with balance transfers. Unfortunately, credit card debt can build quickly if balances are not paid in pull, but if used correctly a credit card balance transfer can buy you time so that you may pay down the debt without incurring exorbitant finance charges. Balance transferring is as simple as filling out the application of your card issuer of choice. But you should carefully investigate and research the terms and conditions of your new card to avoid things like balance transfer fees, penalties and surcharges that some cards will employ. Card companies like Visa, American Express, MasterCard and Discover have many different kinds of cards and many of them have attractive balance transfer features. Some questions that you should asking about balance transfer cards: 1. What is the ongoing APR of the card after the introductory rate expires? 2. How long the introductory rate last? 3. Will I be able to payoff the balance transfer by the end of the introductory APR offer? Tip! Cashback credit cards give you a percentage of your cash back each time you use them. Some cashback credit cards offer a higher percentage when you use them at the shops of 'member merchants', but the card can still be used at any shop that accepts the imprint on the card.
4. Does the card offer an introductory APR on new purchases as
well as transferred balances? 5. Are there any balance
transfer fees?
6. Are there any hidden charges? Some credit card issuers will whack consumers with significantly higher APR's after the introductory rate expires. If you plan on carrying the card balance past the introductory rate offer, this particular balance transfer offer may not be suitable for you. In this case, finding a card that offers both a balance transfer offer with a lower ongoing interest rate is the most ideal solution, particularly if you are unable to pay off your debt within the introductory period. At a minimum, you should select a card that offers a competitively low introductory rate that lasts until you can pay off the amount you transferred.
Many credit card companies will often charge fees for balance
transfers. You should be very cautious when selecting balance
transfer credit cards that charge transfer fees, which can be
significant. There are a wide variety of card offers that either
do not charge Tip! Although credit cards can be great for numerous reasons, you should always know your interest rates and have a good general idea of what your bill is going to be before you make a purchase. Many times, those who have credit cards will make purchases, knowing they can’t make the payments - then suffer when they get the bill and aren’t able to pay it.
transfer fees at all or have nominal transfer fees that are
reasonable. Stick with the balance transfer offers that do not
charge you fees. Additionally, you should also find a balance
transfer card that gives you the freedom to transfer balances
throughout the introductory period, not just when you open the
account and do the initial balance transfer.
Most of all, do not misinterpret the thought of balance transfers as a way to escape your debt obligation. It does not mean that you can avoid paying your debt; it simply provides you more time to pay the balance off without incurring steep finance charges. But if you are not careful, utilizing a balance transfer irresponsibly can often times add significantly to your debt burden. For example, if you pay only the minimum after transferring your card balance and do not pay down the card balance by the time the introductory offer expires, plan on paying out significantly more in finance charges.
For more about credit card balance transfer offers, Robert Alan recommends that you visit CreditCardAssist.com
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