Wednesday, April 25, 2007

4 Things You Need To Know About The Best Balance Transfer Credit Cards

The best balance transfer credit cards aren't really as hard to find as the proverbial needle in the haystack. It's just a matter of understanding what makes certain cards the best of the best.

If you're interested in finding the best balance transfer credit cards for your financial needs, these four tips will help you do just that.

1. Don't Judge a Card By It's Initial Interest Rate

If you're looking for the best balance transfer credit cards available, you are most likely carrying a balance on your current credit card accounts. Because of this, the interest rate of the credit cards you're interested in should be factor number one in your balance transfer decision.

Many consumers make the mistake of jumping at balance transfer credit cards that offer low introductory rates without really considering what those rates will be going up to once the introductory period is over. Don't follow in their footsteps.

When deciding which companies offer the best balance transfer credit cards, look at the long-term interest rates, not just the introductory rates. A 0-percent rate that only lasts six months and then jumps up to 19 or 20 percent isn't really a good balance transfer credit card. The best balance transfer credit cards will have an interest rate that stays low when the introductory period is over.

2. Interest Rates Aren't Set In Stone

When dealing with credit cards, you have to understand that interest rates aren't set in stone. They can (and will) go up if you default on your credit card agreement in any way. Make a late payment or go over your credit limit and that low interest rate can really take a hike.

Even the best balance transfer credit cards will up your interest rate if you make a late payment or abuse your account privileges in any other way. To make matters worse, if you pay any of your credit card statements late all of your credit card companies can up your interest rate. This ugly credit card phenomena is referred to as the Universal Default Agreement.

Remember, when you finally get yourself set up with the best balance transfer credit cards you can find, make sure you do your part to keep the favorable terms you've been presented with.

3. They're Not a License To Pay Less

So you transfer your credit card balances to the best balance transfer credit cards and suddenly you realize that your minimum monthly payments have gone down. Don't get too excited. It doesn't mean you should pay less each month than you have been.

When you transfer your credit card balances to a lower-interest credit card, your minimum monthly payment will go down because you're paying less towards interest. What this means is that you're going to get your balances paid off faster because more money is going to be going towards the actual balance each month (especially if you pay the same amount you had been on the higher-interest card).

Do yourself a favor and pay as much as you possibly can towards your credit cards each month, even if you do have the best balance transfer credit cards out there. When you pay them off faster (saving hundreds or even thousands of dollars in interest charges), you'll thank yourself.

4. The Best Balance Transfer Credit Cards Aren't Used For Purchases

When you transfer your existing credit card balances to a credit card with a lower interest rate, don't be tempted to charge more. The purpose of getting the best balance transfer credit cards is to pay your debt off faster -- not to accumulate more debt in the process.

As tempting as it may be to buy that new laptop at 0 percent interest for six months, don't do it. Wait until your current balances are paid off and then consider making the big purchase.

By following these four credit card tips you'll be able to find (and manage) the best balance transfer credit cards on the market, enabling yourself to get out of debt faster and for less money.

1 comment:

Andrew said...

Before transferring a balance, ask if there is a fee. Also, ask how long the low rate lasts. Those low rates on credit card offers are usually only good for six months. If you are late on one payment, the low rate is immediately replaced with a much higher rate. Another note of caution: When you transfer a balance from one card to another, wait to see the balance appear on the new card before closing the old one.