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The
Ins And Outs Of Balance Transfers
Author: Peter Kenny
If you have a number of credit cards, or are looking
to get another card, then it pays to know about the
ins and outs of balance transfers. If you use balance
transfers correctly you can save yourself a lot of money
in interest payments on your debts. If you are uncertain
about how to use balance transfers properly, then here
is some advice on the ins and outs of balance transfer?
What is a balance
transfer?
A balance transfer is simply where you transfer part
or all of one credit card balance to another credit
card. You are effectively using one credit card to pay
off another one. For example, if you have one credit
card with a £1000 balance and another card with no balance,
you could transfer some or all of that £1000 onto the
card with no balance.
How do I
make a balance transfer?
Making a balance transfer is extremely easy, especially
if you have online banking. IF you have just got a new
card then it is likely that you will asked if you want
to make any balance transfers straight away. If you
do then you simply give your other card details to the
new card issuer along with the amount you want to transfer
and they will sort it out for you. Also, on most online
banking systems there is a feature to allow you to make
balance transfers at any time.
Costs
of a balance transfer
Unless you have a special rate for balance transfers,
there is usually a cost involved in making a balance
transfer. These rates can vary, but
are usually either a fixed fee or about 2% of the amount
to be transferred. |
When transferring a balance it is
important to take these charges into consideration, because
it may cost you more than the money you are saving if
you have to pay a variety of fees.
0% balance transfer offers
One good way to make balance transfers work for you is
to get a card with 0% on balance transfers. These cards
usually charge a fixed fee for transferring your balance,
but offer 0% interest on the amount you transfer. This
0% rate usually lasts for around 6 to 9 months, during
which time you will not pay interest on your transferred
balance. This is especially good for people who are currently
struggling to keep up with their credit card payments
due to high interest rates. However, you must remember
that new purchases on these cards will be charged at the
standard APR, and that after the 6 or 9-month period you
will have to start paying interest.
Consolidating balances
Perhaps the best way to use balance transfers to your
advantage is to consolidate your credit card debts. If
you have a number of credit cards with different interest
rates and balances, then try and transfer as much as you
can to the cards with the lower interest rates. This will
save on your interest, and as you pay off the debt you
card start to transfer more and more onto the lower interest
cards. If you use balance transfers wisely then you can
really reduce the interest that you pay and keep up with
your credit card repayments. |
