Good money management is more than just being frugal with your money. It also involves keeping your eye out for opportunities to save more money over the long run with the debt you already have. Using a 0% balance transfer offer on a credit card, for example, can save you hundreds or thousands of dollars in interest expenses.
Balance transfer cards are nothing new, but it's surprising how many people forget that they are a viable option for saving money. People with high interest debts can take advantage of a no-interest promotional offer from credit issuers, and enjoy a set period of no interest repayments. When your entire monthly payment goes toward the principle balance, you'll pay the balances off rather than just paying interest and finance charges.
When evaluating credit cards and the 0% balance transfer offers, here are some points to consider:
Consolidating Balances. You want a card that has enough available credit that you can consolidate all balances from higher interest credit cards onto the new card to receive the benefits of the 0% promotion. Make sure to read the fine print of the offer, to understand how much in fees your transfer(s) will cost you, and whether or not you will still save money on the balances if you transfer the balances and pay a fee. Keep in mind that you will be saving possibly hundreds of dollars on interest charges which should help you pay the balances off much faster than you would have otherwise.
When the Promotion Ends. Like all good things, most 0% balance transfer promotions are only good for a certain period of time before the rate increases. Know what you'll do when the promotion ends – will you have your balances paid off in full at that time? Will you need to begin looking for a lower interest card? Sometimes a credit card with a no interest transfer promotion will have a higher than average interest rate on the remaining balance once the promotion ends and you may want to begin looking for a new transfer offer at that time to avoid paying excessive interest rates. If you can't find another interest free promotion, you might save by using a personal loan to pay the remaining balance off and repay it through the loan at lower interest and finance fees.
Managing the Account. Did you know some balance transfer credit cards also offer 0% apr on new purchases made with the card? Understand whether or not your card offers this on purchases before you start spending. Since the purpose of transferring the higher interest debts is to pay it off faster, try to refrain from new spending! It's great to have a 0% interest option for new purchases though, in the event something comes up.
Consider Offers Carefully Before Choosing One. Because the current economic climate has put the squeeze on these types of cards, it's becoming harder to find no-interest credit card offers. Cards typically have transfer fees and the promotions are limited to twelve months or six months.
0 Balance Transfer Offers
Paying off credit card debt with 0% interest is a dream come true – which is exactly why a large number of credit card companies offer the promotions. They know it will attract new customers who have debt with other credit card companies to transfer that debt to their cards. But where is the value to the company offer the credit card balance transfer offer; if they let you repay that debt with 0% interest?
Whenever you see credit card promotions that sound like they're going to be a good deal for you, it's best to look into them closely and make sure you read all of the “fine print”. A 0% balance transfer is typically good for a specific length of time, six months or twelve months are the most common terms. If you have several thousand dollars of debt on a higher interest credit card and take advantage of a 0% balance transfer offer for twelve months, the credit card company is betting on you still having a balance once the promotional period ends. When the six or twelve months of no interest repayments end, the balance will start being repaid with interest.
A common mistake many people make when transferring balances under the six or twelve month 0% promotional offers, is not checking what the interest rate will be after the promotion ends. If you're moving a balance that you are currently paying 9% interest to a card with an interest rate of 19% after the promotional period ends - unless you are able to pay it off completely during the 0% interest period, you are not likely to benefit financially over the long term. You would have to start looking for another 0% balance transfer offer, or pay the higher interest until the balance is paid off.
The other often overlooked factor of balance transfer offers with 0% interest is that most of them charge a transfer fee. The fee can range from 1% to 5% of the amount transferred. This fee can add up, depending on how much money you are transferring. There are some instances when the amount you pay for the balance transfer fee will result in more money paid than if you had just kept your balance on the card it was on and paid interest. To ensure you're actually getting a good deal, you'll want to play with the numbers and determine how much you'll spend for the life of the balance if you keep it on the card it's currently on, or if you move it to the new card with the 0% balance transfer offer, and don't forget to factor in a transfer fee if you have to pay one, and what the interest rate will be at the end of the promotional offer.
Interest free balance transfer offers are also only good as long as you make your payments on time. This is important to keep in mind if you sometimes have difficulty keeping up with your payments, because if you send one a few days late you can lose your 0% interest rate and start paying a much higher interest rate.
In order to make balance transfer fees work for you financially, it's actually better to find a low interest balance transfer offer that is fixed for the length of the balance. If you can transfer a few thousand dollars from a credit card with 9% interest or higher, to a card with 1.99% or 3.99% fixed interest on the balance transfer for the life of that balance, you will save hundreds of dollars in interest and actually make out better than the 0% offers (provided you know you can't pay off the entire balance before the 0% offer ends).
Both Elizabeth Williams & Debbie Dragon are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Elizabeth Williams has sinced written about articles on various topics from Finances, Credit Cards and Advertising Guide. Elizabeth Williams, Editor-in-Chief for CreditCardFlyers.com CreditCardFlyers.com makes it easy to compare and apply for a variety of credit card offers featuring lo. Elizabeth Williams's top article generates over 60500 views. Bookmark Elizabeth Williams to your Favourites.
Debbie Dragon has sinced written about articles on various topics from Finances, Credit Cards and Kitchen Home Improvement. This article is courtesy of CreditorWeb.com, where you can compare business credit card offers and apply for. Debbie Dragon's top article generates over 165000 views. Bookmark Debbie Dragon to your Favourites.
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