Make Balance Transfer Credit Cards Work For You

If you are paying interest on your credit card debt, you should seriously consider balance transfer credit cards. This is especially so if your balance is being slapped a high APR. There are many 0% APR balance transfer offers nowadays, and these will surely benefit you.

Balance Transfer Will Reduce Your Financing Charges

The 0% APR on balance transfers does not mean that your effective financing charge is zero as well. Note that the 0% APR applies to your transferred balance for a specified time frame only, although this may extend to as long as 21 months. After which an APR ranging from 11% - 21% is used, depending on the credit worthiness of the cardholder.

Even if you settle your balance within the 0% APR time frame, a 3% transfer fee is usually slapped. Some credit card issuers even charge as much as 5%. Other companies require that you pay an annual fee. All of these charges add to your effective cost of money.

In spite of the charges, balance transfer will still result in substantial savings in interest expense. But in order to realize this, all payments should be done on time and the credit limit should not be breached. Take note that a delay in payment will be meted severe penalty in terms of financing charge, and this will be contradictory to the intention of saving on cost of money.

Things to Consider in Choosing a Balance Transfer Card

0 balance transfer credit card offers are common, which practically evens out the playing field as far as this feature in concerned. Hence, other attributes will have to be taken into consideration, such as:

1) The duration of the 0% APR period.  Of course, the longer the better. As previously mentioned, there are credit card issuers offering 21 months.  And given the competitiveness in the market, longer offerings may be expected soon.

2) The regular APR to be used after the 0% APR time frame has elapsed. Although this is largely dependent on your credit standing, to some extent it may be negotiable. Regardless, try to get the lowest rate.

3) The transfer fee is usually 1% - 5% of the amount transferred, although most companies slap a 3% fee. Try to haggle for the lowest possible percentage. If you are a member of a credit union, a few offer 0% balance transfer fee. It is worthwhile to check this out since the savings could be substantial.

4) Although most issuers waive the annual fee, some don’t.  Make sure you are not one of those paying annual fees.

5) Check of the 0% APR applies to current purchases as well. Although your balance transfer credit card should be used to liquidate your debt and not to add to it, there are some emergency situations wherein a credit card purchase cannot be helped. In instances like these, it is to your advantage that your credit card also affords 0% APR on current purchases.

6) Other perks and rewards. Do you know that many issuers offer cash backs and rewards for this type of credit card? In case of rewards, just make sure that the products and services offered will be useful to you. There is no point in getting airline miles or travel points if you do not travel in the first place. And you will not be able to take full advantage of a gas credit card if you do not own a vehicle. For this reason, cash back options provide more flexibility. Although the actual value may be a bit less than the rewards, at least you can purchase anything with it.

Managing Your Balance Transfer Credit Card

This type of card alone will not solve your credit card woes. True, it will allow the reduction of your financing charges, but you will still have to settle your obligations. The sooner you do it, the better for you.

Assuming you have made the right choice of credit card, you have to make sure that you stick to your battle plan in paying off your bills moncler jackets, or at least bringing them down to manageable levels. This means religiously paying the required amount on time. If the original intention is to wipe out your credit card debt within the 0% APR period in order to minimize financing charges, then stick to the plan. Oftentimes this necessitates not adding to your balance by foregoing new credit card purchases.

The bottom line is that you will have to control your spending and properly manage your cash flow. This will lead to your financial well-being.  Remember that you should be the master of your balance transfer credit card, and not the other way around.