Balance Transfer: Cards That Fit and Benefit

Opening a new credit card may seem a bad idea if you have some other loans. "Why shall I increase my credit card debts and get a new plastic?" - you can think. A balance transfer deal may help you to manage your debt efficiently.

You can transfer your high interest credit card balance to a lower interest card and, in turn, to save money. How to benefit from balance transfer and not to get into a financial trip? Let's zoom at the peculiar aspects of balance transfer deals and reveal the hidden pitfalls.

What Is a Credit Card Balance Transfer?

A balance transfer is the service offered by many credit companies which enables you to shift your debt from one credit card to another. It is usually used to obtain a lower APR and to save money because balance transfer offers usually come with a low introductory interest rate from 0% to 1% for a fixed period of time. Also you can unite your debts by transferring the balance from more than one card.

How Does a Balance Transfer Work?

Apply for a new credit card online. If your application is accepted, request the bank to transfer your existing balance and give your new credit company the details of your previous card. The new card issuer simply pays off your debt and moves it to the new credit card. Now you owe money to the new credit company instead of the previous one. Traditionally this service is targeted for the customers whose credit history is excellent or good. However, if your credit history is fair you can find a balance transfer credit card for you too, so check all the offers.

Any Hidden Pitfalls?

First of all, read attentively all the words and fine print of a suitable transfer card offer to understand all the terms and conditions. Otherwise, you could end up paying fees and a much higher interest rate than you expected.

Check that your entire debt will be moved to a new card, not only a part of it. Be attentive to the limit of your new credit card - if it is not high enough for the accommodation of your debt fully, you will get two credit card debts instead of only one. Your goal is to obtain a balance transfer and ease your financial situation. If you get only a part of your credit balance transferred, you won't achieve the aim. Vice versa, you can get more financial difficulties than you had before.

Remember, the most profitable balance transfer credit offers are those which have a fixed low ongoing APR or a long introductory period (6-12 months) when you won't get any interest payments. But check that these interests will not increase significantly and spoil your successful credit deal when the introductory period finishes.

Next thing to pay attention to is a balance transfer fee - a one-time fee charged by some credit card issuers for transferring a balance from one credit card to another. A balance transfer fee is generally from 1% to 5%. Make sure that there is a fixed maximum amount, for example 50 dollars, or else a balance transfer may cost several hundred dollars. Moreover, some credit companies don't charge a balance transfer fee but they can get an annual fee or higher percentage.

If you keep in mind all these aspects, you will avoid the possible problems and get a profitable balance transfer deal.

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