A Balance Transfer Credit Card is like a revolving credit line that allows you to get another line of credit with the same amount of interest and make payments without any checks and payment stubs to deposit into the special account. Or, you can put the card debt you have on any kind of “loan” for unsecured debt or “grace loans” to pay for things with your account instead of paying interest on the actual loan. Or, if that isn’t a good idea for you, you can transfer the debt to a new card for which you already have a good credit score.
Simply transfer the outstanding credit card debt to a new card that has a lower interest rate and no fees. You may take the extra and save on interest payments, even if you did not apply for the card with the delinquent balance.
What Does The Card Offer?
Not all interest rates on Balance Transfers are lower! Some credit cards offer an air of exclusivity when it comes to the amount transferred or to things like loans or lines of credit that may be subject to repurchase agreements. A comparatively lesser amount than 0% APR credit cards are also offered by many major banks.
Balance Transfers are useful because they allow customers to avoid finance charges and high annual fees if they don’t make the switch to a card that has 0% APR interest on purchases. If making a balance transfer, it could save you thousands of dollars in interest payments and fees, especially since you can pay it off with the money you owe, rather than going to the annual limit. What’s more, you can cancel the low interest and no-interest balance transfer’s on your account, thereby avoiding the penalties that finance charges might impose. A balance transfer also allows you to pay only the minimum required balance on the transferred card after the introductory special period ends.
Even With the Fine Print
Sometimes it doesn’t look like a problem when people transfer their balances. Sometimes they even switch providers. When it comes to credit card applications, we tend to think of balance transfers or Balance Transfers contracts offered by banks or credit unions as the ‘easy’ way out. But such deals often contain other hidden dangers that keep cardholders from applying for a card: delays in payment or missed payments may result in penalties against the card, and you might be charged for late fees or over-limit on balances you don’t already have.
It’s a good idea to read the fine print for your balance transfer offer carefully, as many companies will be charging extra fees for late applications, missed payments, or other unforeseen problems. You’ll find the word ‘transfers’ in the fine print, especially on the fine prints, and any problems that arise will show up on your credit report.
Why Should I Transfer My Cash?
Cash advances are useful because they allow customers who paid as if they would not be able to pay with cash at all to avoid finance charges are convenient because you’ll have to transfer the money to a new card that has 0% APR on purchases. But ordinary purchases can be charged a higher interest than ordinary finance charges, so it’s better to make the money transfers with cash, not using cash to pay off a financial obligation.
When Does a Balance Transfer Be Good?
Not everyone who has a balance on their card is like other customers who have balances on several balances. Some people carry balances from one card to another with a debt ranging from $1,000 to $20,000. You don’t necessarily have to have the various balances that are attached to pay off that debt, as a few large credit card companies do. However, you still enjoy many advantages which accrue when you transfer balances solely as a matter of habit.
For example, American Express (NYSE: AMEX) pays off its customer balances at a 25% APR on purchases. But if you pay off your balance annually, you’ll get a 25% APR interest rate, whereas if you maintain a regular balance you’ll get an APR of 17.9% at 21.5%. In other words, if an individual carries over a balance from one year to the next, she will regularly pay an outstanding APR on purchases and interest at an APR that is significantly higher than what the credit card company can afford to charge. If you’re not careful to keep the amount transferred or the balance transferred at face value, you risk transferring the entire balance of your ongoing debt to a new card that has a significantly lower interest rate than you currently may be able to pay off.
There are other advantages to balance transfers. So do not transfer more than your debt to a new card that has the other credit card companies offering 0% APR on purchases and interest; you can pay off all your debt as long as you keep the balance down to a manageable level.