Ten Things You Should Know About Balance Transfers

Credit cards are supposed to make things easier for the card holder and not difficult for them. That is why when there is a big debt on their credit card, many card holders consider balance transfers. However, there are certain positive as well as negative sides to balance transfers. There is no harm to know more about them before you finally give the nod for a balance transfer. The following is important information to have to help assist you in making a decision on balance transfers.

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Ten Things You Should Know About Balance Transfers

1. Firstly, transferring credit card balance offers the card holder the opportunity to make savings. Zero percent balance transfers are good but card holders can save money on a low rate balance transfer as well especially when the interest rate is not moderate or high.

2. Getting your credit card balance transferred also means that the card holder will be able to get off the debt faster. If the card holder does not transfer the credit card balance to another card which has zero percent interest rate, then that will mean paying the charges that the bank levies upon you month after month for carrying the balance. By a credit card balance transfer, one is likely to pay off the creditors easily and within time. Why? Simple. The payment in case of a balance transfer is directed towards the principal and not interest thus enabling the card holder to settle with the debt quickly.

3. Credit card balance transfers can also help the credit card owner to apply for another credit card that has low introductory offers and earns cash back, gas rewards, miles and points and more.

4. It is easy to simplify ones finances through credit card balance transfers. Experts are of the opinion that it makes a lot sense when credit card holders consolidate all their debts to one account rather than paying to several credit card companies.

5. Note that your credit card balance transfer will not come free of cost. Credit card companies often levy a fee that is based on the amount of balance that is transferred. Balance transfer cards always does not come with a cap which means that bigger the amount transferred, bigger is the fee that is to be paid.

6. Though credit card balance transfer has its own advantages, there is one place where it hits a low end for a short period of time and that is one’s credit score. By shifting all your debt on one single low rate card, the card holder runs the risk of bringing their credit score down to some extent. However, things are not so gloomy as it might sound as credit card balance transfers gives credit scores a boost in the long run. This is due to the fact that an additional credit line is open.

7. Credit card balance transfer is not for all which means that in order to do so one needs to have good credit Approvals are not always easy and if one does get approved, the credit line might not be as good as it was promised.

8. Read through the deal before you make your decision as often the deals are not what as they seem. A deferred interest card is not and does not work as a zero percent interest card. There are differences between the two and the credit card holder needs to understand that or else at the end of the day one might end up paying a high rate on a higher balance.

9. Take into account that credit card balance transfer deals can be financial scams too. Stay away from such companies who promises big. Zero percent or low credit card balance transfers sound nice but judge the authenticity of the credit card issuers so that you are not losing out in the deal. Refrain from paying up front and read the documents well before signing over the dotted line.

10. Zero percent balance transfers are not always long term. They are good baits but with short term results. A maximum of 6 months to 18 months at the most comes with such deals; hence it is that the card holder considers all the pros and cons before taking the plunge.

Ten Things You Should Know About Balance Transfers

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Things to Watch Out For If You Transfer Your Balance

Interest rates: most balance transfers offer limited time interest rates. (example: 0% for 6 months). Then once that period is over it usually jumps to a high interest rate. Make sure that interest rate fits your pocket.
Transfer limits: you’ll need to transfer an amount that’s within the credit limit on your new card, minus the fee.
Fraud Protection: Credit card providers often try and sell you fraud protection and lost card services. The benefits may not be that worthwhile as you are protected by law already to some extent.

It’s usually recommended not to make any purchases with a credit card to which you have made a balance transfer.