Credit card balance transfers are commonplace these days, with most credit card holders using them at some point because they can be such a valuable tool if you know how to use them correctly. If you use balance transfers properly, you can take advantage of the low interest rates that are being offered by credit card companies to get out of debt. If you want to make a balance transfer work for you, there are a few tips you'll need to keep in mind.
Find a 0% Introductory Offer
When you want to do a balance transfer, look for credit cards that offer 0% introductory offers. While many credit cards offer very low introductory interest rates like 1 or 2%, finding one with a 0% interest rate is entirely possible. While 1 or 2% is definitely a low interest rate for a credit card, it can still add up if you have a big balance. Don't settle for anything but a 0% introductory interest rate when doing a balance transfer. This means that you can essentially park your credit card balance on the new credit card without paying any money in interest for the entire introductory period.
Look for Long Lasting Introductory Periods
When you are evaluating 0% interest credit card offers, make sure that you choose one that has a longer introductory period. 0% offers are not necessarily created equally. Some credit cards give you 0% interest for only the first six months while others will give you as much as two years of interest-free balance transfers. In this situation, you should look for offers of 18 months or more. This way, you can maximize the amount of time that you have before you have to start paying interest or looking for another balance transfer to work with.
Watch Out for Fees
Typically, credit cards charge you a fee based on the total amount of money that you are transferring to the new card. Figuring out how to minimize this fee is important if you want to come out ahead on the deal. When shopping around the between multiple credit card offers, read the fine print and see how much they will charge you for this service. Otherwise, you might end up throwing away a large amount of money.
Only Transfer When Necessary
If you're considering doing a balance transfer, you need to minimize the number of times that you have to transfer because of the fees involved. If you are constantly transferring balances from one car to another, you could wind up actually losing money on the transaction fees. It's also possible that when dealing with multiple cards and terms, you may forget when the introductory interest rate expires. Also, when you have multiple cards to manage it's easier to forget to make a payment to a card. Typically, when you miss a payment, the introductory interest rate reverts back to the full interest rate. This could negate the entire point of transferring your balance in the first place. The best thing to do is to consolidate all your credit card debt onto one single 0% balance transfer card.
Pay Down the Debt
The primary purpose of transferring debt to a 0% interest credit card is to save money on interest so you can get out of debt faster. If you keep putting off paying the debt, the balance transfer will be for nothing. Do everything you can to pay down the debt as quickly as possible once it is on the card. Hopefully when the introductory interest rate expires, you may not have much left to pay interest on.
Dave writes about balance transfer credit cards at CreditCardHelp.com.au, an Australian credit card website.
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