Wednesday, February 04, 2009

Credit Card Balance Transfers Explained

What is a balance transfer ?
A balance transfer can be explained simply as a balance transfer! When a balance is transferred usually from a credit card, but possible from a bank account or loan to a credit card with a offer interest rate (usually 0%) for a set period. It makes not have got to be the full amount. The card receiving the balance will an interest rate for a set term, normally 6 months, but can be 9 calendar calendar months or even a year. Take a expression at the current balance transfer deals currently available. This volition give you a spirit of the typical sort of deal available.

Should Iodine apply for a balance transfer ?

It is of import to retrieve that a balance transfer makes not intend that the debt have gone away. It just intends you are not paying interest on it. You will still have got got to keep payments.

This may look obvious but many people make not get this consecutive in their mind.

The basic criteria for getting a balance transfer is when you regularly have an outstanding balance after making your monthly payments. This is the amount you should look to transfer to another card. This volition mean value that for the time period of the offer you will pay no interest on the balance (provided you do the minimum payments).

You should be very wary of taking up a balance transfer, if your overall debt is increasing. A balance transfer is not a greenish visible light to pass more than money. The money you salvage should be used to diminish your debt.

What should I look for in a balance transfer ?

You need to be aware of the following when looking for a balance transfer card

Good things

Length of offer period.

Offer Interest Rate.

The nothing or low interest rate charged on the balance.

Possible transfers from loans and overdrafts.

On some cards you can transfer from existing loans and overdrafts and still get the offer.

Bad things

Cut-off time period for the balance transfer offer.
Hidden Charges on transfers.
Some banks will charge a handling fee on the balance transfer.

How long the offer is valid for ?

There is usually a cut off point from the account gap when the offer is no longer valid. Be very aware of this otherwise you could stop up transferring a balance to a higher rate !!

What about new purchases ?

Unless there is also a 0% interest rate on new purchases then you should avoid making new purchases on a balance transfer card. This is because the banks will look to reduce the balance transfer debt quicker than the new debt. Provided your credit history is reasonable, there is nil fillet you having respective cards for different purposes. A good manner is to have got a card, which specialises in 0% on new purchases and another card for balance transfers.

What haps when the balance transfer time time period coatings ?

When the balance transfer offer period coatings the debt will revert to the typical variable APR. The lenders trust at this point that the cardholder will reserve the card and some of the debt, so they can then begin charging interest and making some money! So return into consideration the low interest rate credit cards. However, there is nil fillet the under control credit card holder from switching to another balance transfer deal and shutting the account. The rhythm then begins again. Always allow 6 hebdomads to 8 hebdomads before the end of the offer time period to apply for a new card. This agency you can get the balance transferred to the new card before the lender can begin charging the higher rate. You have got to be organised to make this, but if you are it makes work. People who regularly switch over balances are cognize as card tarts.

The Golden Rules

There are three things to look out for with a balance transfer card

As mentioned previously, the unsuspicious tin get caught out when disbursement on a balance transfer card.
Maintaining regular payments. If you lose a payment you incur some penalty, so be aware. To be safe set up a direct debit.
The interest rate applied when the offer time period finishes.

Good fortune with your choice.

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