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Balance Transfer Credit Cards – An Overview
What Is A Balance Transfer Credit Card?
Simply put, a balance transfer credit card allows you to transfer your card balances over from your other credit cards. Through this transfer you can save money on the APR. If you can consolidate all your balance to a single credit card, you can easily keep track of your debt.
Why Should I Transfer My Balances To A New Credit Card?
Balance transfer credit cards, when used correctly, can help you save money. Most people keep a balance on one credit card, a separate balance on yet another, and pay a high APR to maintain both of them. Balance transfer credit cards have outstanding introductory APR’s and the very best balance transfer credit cards will have a comparably lower ongoing APR as well.
Some of the best balance transfer credit cards offer an introductory APR of 0% for an extended period. Those people who are in a debt trap can take advantage of this offer. There are even some balance transfer credit cards which prolong the introductory ARR of 0% until you have paid off all the balance that you have transferred. Certain balance transfer credit cards have a fixed rate and the rate remains the same until you pay off the balance transferred. This type of card, often times lacks the introductory 0% APR offer.
Things to Remember
It is not difficult find a balance transfer credit card, and in fact, you might have already been receiving solicitations from several credit card companies. But finding the best balance transfer credit card can sometimes be a murky affair. Understanding certain key elements regarding these cards can help you to choose the best.
Most people fall for the introductory offer given by the balance transfer credit cards. But this is only for a specific period of time. The period of time offered on these introductory APR balance transfer cards is often times determined by your credit history. So while selecting a balance transfer credit, keep a close eye on the introductory offer. Make sure that the introductory offer will work in your favor.
In some instances, some credit card companies will require an initial balance transfer along with the application for the card. Some people might not be comfortable with such a demand. The best balance transfer credit cards provide flexibility on balance transfers that will allow you to transfer balances at anytime during the introductory period.
Some of balance transfer credit cards might have a fixed rate introductory offer which is not a 0% APR on balance transfers, but is very low, remaining constant until you pay off the balance.
Most balance transfer credit cards have a transfer fee. Make sure that the transfer fee does not negate the financial advantage you are trying to get from the whole process. This aspect should be considered seriously by people who are planning to transfer balances from two or more cards. There will be no transfer fees incurred with the very best balance transfer credit cards.
You should compare your existing cards interest rate with that of the balance transfer credit card. While comparing include all the fees associated with each card as well. And if you are planning to use your balance transfer credit card for ongoing purchases, make sure to get the complete details, including ongoing APR’s on purchases, penalties, late payment fees and any miscellaneous surcharges that might be incurred when using the card in this manner. Make absolutely sure that there are no hidden charges.
4 Things the Best Balance Transfer Credit Cards Have in Common
Anyone who has ever dealt with balance transfer credit cards knows that some of them tend to outshine the others. In fact, the difference between one balance transfer credit card and another can be like the difference between night and day.
So how do you determine which balance transfer credit cards are the good ones and which aren’t? By looking for these four telltale signs.
1. A Low Interest Rate
Almost all balance transfer credit cards have a low interest rate when you sign up for the card, but the best balance transfer credit cards have interest rates that stay low.
Oftentimes consumers jump at the chance to transfer their credit card balances to a card with a impressively-low interest rate, not realizing that the rate jumps up after six months or so. If you do this, once the introductory period ends, you may be in worse shape than you were before.
If you have a $3,000 balance on your credit card and you’re paying 16.99 percent, it can be tempting to search for balance transfer credit cards with a 0-percent introductory rate. But ask yourself — what is the interest rate going to be when that 0-percent period is over? If it’s higher than 16.99 percent, do you really want to transfer your balance to that card?
Instead of worrying about a low-interest introductory period, look for balance transfer credit cards that offer a low interest rate for the long term.
2. Whatever Happened to Grace?
Do you remember the good old days? Back when a 30-day grace period was the norm? Those days are long gone. Nowadays you’re lucky if you get a 20-day grace period and some credit cards aren’t offering grace periods at all.
Interest isn’t the only thing you should concern yourself with when looking at balance transfer credit cards. Make sure that the credit card you apply for has a grace period of no less than 20 days.
3. They Want You To Pay What?
With balance transfer credit cards competing so hard for business, you’d think they’d be willing to bend over backwards to get your account. Not so…
Surprisingly enough, many balance transfer credit cards charge a balance transfer fee to transfer your debt. Usually the fee is calculated as a percentage of the balance being transfered and, depending on how high your balance is, that fee can amount to quite the pretty penny.
Do yourself a favor — only apply for balance transfer credit cards that don’t charge a balance transfer fee. Regardless of what the other credit card companies want you to think, they ARE out there.
4. The Importance of Online Access
Most credit card companies offer online account access nowadays, but the scope of that online access and what is required to get it often differs. Some balance transfer credit cards make you pay for online account access and others charge you a fee to make payments online.
Before applying for balance transfer credit cards, make sure that the cards you are interested in offer free online account access and don’t make you pay for the privilege of online payments.
With credit card debt becoming the norm and so many companies offering balance transfer solutions, it’s important that you find the credit card that fits you perfectly. Don’t settle for just any old balance transfer card. Pay close attention to the above four tips to find the best balance transfer credit cards on the market.