Balance transfer cards are cards that offer no-interest or low-interest rates on balances you transfer from your other charge cards or debts. Balance transfer cards don't tolerate late payments, so if you miss out on a particular repayment all the benefit is lost and instantly the high regular annual percentage rates are applied.
These cards are ideal for the consumer looking to consolidate several charge cards or debts onto a single bill, but be sure that you read and understand the terms and services before applying for the balance transfer credit card of your choice. Comparing the best of these cards is without question a fantastic way to save money.
Many card companies include 0% charge card balance transfers in their introductory offers and by moving balances from your old cards to a new one with at least a six-month 0% card transfer, you can save hundreds of dollars over the life of the offer . If you owe several thousand dollars on high interest rate cards, it makes sense to transfer the balances to get a break on the interest, even for a few months. In addition, if the card you transfer to has a considerably lower interest rate, you will save money the entire time you're paying off the combined balances.
The major issuers of charge cards, Visa, MasterCard, Amex, American Express and Discover, do not penalize for transferring balances, so transfer your balance to a lower interest card or one with a low introductory interest rate, or get a charge card debt consolidation loan. You see, what the big credit card issuers like American Express, Chase, Discover Card and Bank of America are hoping is that they will gain new customers by offering generous balance transfer deals. Also, what these card companies know is that the vast majority of these card holders will not pay off their balances before the introductory rate expires. Of course, if you can't pay off your balance before the introductory rate expires, you're not out of luck. You can always apply for a new card with a low introductory rate, and transfer your balance yet again. Still, if you are currently considering a card transfer I urge you to sit down and figure out exactly how much you owe on your current charge cards and set up a monthly pay schedule.
Balance transfer offers basically allow one charge card company to steal your debt from another company. These offers can also provide reward cards with bonus points, and cash rebates for frequent fliers or gasoline cards holders. In order to get your charge card balance transfers, many card companies are offering these great deals.
An often misunderstood procedure to be aware of involves how banks allocate your card payments amongst balances that are priced at different rates. If you study the fine print in many offers you will learn that some or all of your future credit card payments are allocated toward the lower interest balance transfers, because they are most costly for the card issuer to carry. This may not be in your best interest since you may have run up separate and higher rate credit card balances on new purchases, which you would want removed first. In this type of scenario none of your higher interest rate balances would get paid down until your balance transfer is gone. Therefore, it is advisable to really control new charge card spending while attempting to pay down an outstanding balance transfer.
It is also important to realize that not only credit card balances can be transferred. Other types of high interest debts, including installment car and appliance loans can be moved to a low interest or 0% balance transfer credit card. This is typically handled through credit card convenience or balance transfer checks provided by the issuing credit card bank. Even with the fees for using these checks, it is usually a money saving maneuver to transfer balances from a high interest rate loan to a low interest or 0% balance transfer credit card.
Balance transfers are there for good reasons and should be used as such – in that way they will benefit credit card holders in a big way. And, almost needless to say, balance transfer credit cards, which enable consumers to shift high interest credit card debt to a lower interest credit card, are an excellent tool for anyone.