Are Balance Transfer Credit Cards On the Way Out?

By: Jon Francis

Balance transfer credit cards are among the most popular products on the market today, but the finance columns have been hinting that they might have a limited life span, done in by their very popularity. If that's true, then the word hasn't got to the credit card companies. Far from being on the way out, there are more balance transfer credit cards on offer than there have been for years.

Granted, those offers have changed. The current crop include conditions that guarantee the issuing bank some benefit for taking on a transferred balance from another company. The earliest types of balance transfer cards generally offered 0% interest for a set period of time - usually between six months and one year. If the balance was paid off in that time, there was no interest to pay. There was also no interest to pay if the balance was transferred to another card. To circumvent those who shifted their balance from one card to another, the issuing companies began imposing conditions.

The current crop of balance transfer credit cards fall into a couple of different categories:

-those that offer a low interest rate on transferred balances for the life of the balance.
-those that offer a 0% interest rate for a set amount of time - sometimes as much as a year.

Either of those types of balance transfer credit card may require that you make purchases on you new card on a regular basis in order to keep your introductory rate. The payments that you make on your will be applied to the balance transfer first. Until that is paid off, those purchases will collect interest at the standard rate.

When you apply for a balance transfer credit card, make it a point to compare all factors of the cards that you are considering - including the option of not moving you balance at all. The important comparison points are:
-the introductory balance transfer interest rate
-the length of time of the introductory rate
-the new purchase rate that will apply to your credit card
-balance transfer fees

Add up all the factors and weigh them side by side to decide which balance transfer credit card is the one that you want in your wallet. With the hugely fierce competition in the market place these days you'll be able to find some amazing offers but be careful, unlike the old days you will be charged a fee for transferring your balance which is usually 2.5% to 3% of the balance.

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