For most of the past two years, credit card companies made it very difficult for consumers to reduce debt with balance transfers. 0% APR offers stopped filling up mailboxes and the ones available online were only accessible to people with excellent credit.
The tides appear to have turned in recent months as more and more of these offers are finding their way into mailboxes across the country. This leads many consumers to ask the question, “can transferring credit card balances help reduce debt burdens?”. The answer is yes, if these offers are used correctly.
What to Look for in a Balance Transfer Offer?
If you have high interest credit card debt, you probably have a good idea about just how much interest charges add and make your debt grow, even when you make decent sized monthly payments. To break this cycle of debt, many consumers turn toward balance transfer credit card offers which allow for the moving of high interest balances to a lower interest account. To use this strategy with success, you must know what to look for in an offer Here are three things to consider before applying for a balance transfer offer.
- Introductory period: Read the fine print to determine just how long the introductory period is on your new account. Unlike traditional credit card offers, a balance transfer offer usually offers special terms for a limited period of time. This is known as the introductory period. While most credit cards advertise a single introductory period, such as a 0% rate for 12 months, some card will advertise a rate that can last “up to 12 months.” In the fine print of these deals, you’ll find that some people get approved for 12 months, while others only get a low rate for as little as 6 months. Unless you have excellent credit, avoid these offers.
- Interest rates: All good balance transfer offers come with 0% introductory rates. However, when the introductory period ends, your interest rate will increase to a regular rate that may be similar to your current rate, but potentially higher. When you are considering a balance transfer offer, especially if you know you won’t be able to repay your balance before the introductory period ends, look for a card that has a long term rate, so you don’t end up with a card that charges you more than your current card does.
- Fees and Penalties: All credit card offers come with an assortment of fees. The CARD Act limits certain fees and penalties, but there are still things to look out for. In particular, pay close attention to balance transfer fees. Most cards charge 3% fees, though many charge four or five percent. These fees can add up, so look for a card with the lowest fees to increase your overall savings.
If you read the fine print and carefully crunch the numbers, you will likely find that you can save a significant amount of cash by transferring high interest balances to a new account with more favorable terms and conditions. However, if you want to get the most out of your balance transfer, be sure to focus on paying off your balance and stop spending on your credit cards. That is the best way to insure a balance transfer helps you reduce your debt.
Jeff Weber writes about saving money with the smart use of 0% APR balance transfer credit cards at SmartBalanceTransfers.com, a website where consumers can learn about how balance transfers work.
Find the right full-time, part-time or temporary job in Leicester, by using the e-classifieds. So many people choose this option now, as do many recruiters and big businesses.