Credit Card Balance Transfers
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Everyone is aware of balance transfers when it comes to your credit cards, simply transferring your balance from one card to another may not save you as much money as you anticipate. The average American Carries a credit card debt of over $9000 and pays interest on that amount to the tune of approximately $1300 a year.
The interest amount may not appear to be much when you break it down into a monthly amount which is a little over $100 a month however, this interest money that you’re paying every year can be saved. Here are a few tips that you need to know about how to go about transferring your balances from one credit card to the other the correct way.
APR rate on the credit card:
One of the first things you want to identify is whether the interest rate being offered is an introductory offer or a fixed rate. Any credit card that advertises itself as a 0% APR is an introductory offer, you can be sure that rate will go up as soon as the offer expires.
Time duration of introductory offer:
Now, just because a credit card is offering a 0% introductory rate doesn’t mean you can’t use it to save yourself some interest payments. Provided you do this carefully you can transfer large credit card balances from your existing card with high interest payments to the 0% card, keep in mind the expiration date of the introductory offer. Standard offers are for 6 to 12 months, be careful that you don’t pick up a card with a 60 day introductory offer.
Make sure you pay off your debts before the introductory offer runs out, because the moment that happens you will be required to pay the going rate of interest on your outstanding debts.
Balance transfer fees:
Generally all credit cards do carry balance transfer fees, even the 0% ones. These fees are generally 3% of the amount being transferred but are usually capped at around $100to $150. However if you’re transferring a substantial amount of money you’ll still be saving, regardless of the balance transfer fee. If the amount you transferring a small amount, it may not be worth transfering the amount if the balance transfer fee is an excess of the interest payments. However you’ll need to calculate how long you plan to carry the debts vs. the balance transfer fee.
Annual fees:
It makes no financial sense to take a credit card with an annual fee for balance transfers, unless you stumble across a rewards card that offers great deals. In this case the card will charge a slight annual fee to balance out the cost of the rewards they’ll be giving you. Apart from rewards cards there’s no point applying for a credit card with an annual fee.
Conclusion:
The purpose of balance transfers is to help you generally get out of a bad debt situation. Provided you pay off your debts on time you can end up saving yourself all those interest payments which can go toward helping you clear of your debts. Do not keep on transferring your balances from one credit card to another as this could have a negative impact on your credit scores. If you want to more detail please visit http://www.cashfinance.net.au/.
Category: Credit Card
