For people who have a balance on their credit card, it might be a good deal to shift them to a new credit card to enjoy more benefits. This is through the process of a credit card balance transfer.
Balance transfers allow a credit card owner to transfer the balance on their existing accounts into a new credit card. Many credit card issuers offer this service for free to attract new customers. But it not only does wonders to the credit card company’s business, it can also be good for you.
Here’s how. By transferring the balance of your old credit card into a low or even zero interest rate credit card, you can save hundreds and thousands of dollars on interest fees. Even more, some credit card issuers offer an interest-free period, which is usually from six to twelve months, where the company lends you money for free and without interest. Again, this will save you a lot of money on interest charges. Other incentives also include loyalty points. And the best part is, the process is painless and quick, and can be concluded in just a matter of hours, at the least.
Now, with all the goods laid out in front of you, it might seem a good idea to go for balance transfers right now. But before you do so, there are things you have to keep in mind to make sure you make the most out of it.
Be smart in using your credit card. Just because you don’t have to pay interest for a certain period of time doesn’t mean you go shopping-crazy. Make sure that you are able to pay off your debts or at least switch to another credit card before the grace period is up. Otherwise, your purchases will catch up with you and you will be charged the full interest rates after the grace period.
When you’re offered a 0% interest rate, make sure that the rate is guaranteed and will stay that way once you receive the card. And since other companies charge you fees for every balance transfer, read the fine print to make sure 0% stays at 0% and free means free.
Don’t overlook other features of the credit card. Even if one company catches your attention because of the low rates, don’t ignore certain features such as fraud liability coverage, cash-back plans, and no annual fees. Shop around and don’t limit your criterion to the lowest rates.
Keep track of the time. If you pay late even just once, the low introductory rate might be replaced with a less desirable rate, and you could also be charged a penalty fee. And, make sure you take note of when the 0% introductory rate will end. This is so you can or pay the balance of your purchase without interest or transfer the balance to yet another card before the full APR rate kicks in.
Balance transfers on credit cards really help. Just don’t do it too often because credit card issuers can catch on and it might hurt your credit and make you look bad to other credit card companies. After all, who wants to work with someone known to split once the teaser offer ends?
Be sure to check out our comparison of the most popular balance transfer credit cards.