Understanding the Credit Card Balance Transfers

One of the biggest promotions with credit card companies is that they will offer 0% balance transfers. Many people use balance transfers because they feel that their current interest rate is too high or maybe they'd even like to move all of their debt into one location to keep things more organized. A lot of people are taken into the wind with these offers and jump right on them. However, it is important to read all of the fine print with them. Usually, a 0% balance transfer will only be valid for a set time period. The two most common of these are 6 or 12 months.

Being aware of rates afterwards Now if you have a credit card that has several thousand dollars in debt the company is baiting on the idea that once the introductory period has ended you will have a balance remaining and will have to pay it off with the interest rate that has been pre-determined. This is where yet another mistake occurs because people don't check into what the rate will be. For example, if you have a credit card that has an 8% interest rate but see a card offering 0% for 6 months but 20% afterwards you are very unlikely to be able to pay the balance off before that 20% kicks in. Then you're left with the option of either paying it or continuing the search for another balance transfer offer.

Making a successful balance transfer Balance transfers don't have to turn out bad though. If you keep a few things in mind you could actually benefit very well from one.

Take a note of the rate marked on the transfer. It could be a fixed amount such as $50 or a percentage of the amount transferred which has the possibility to add up to quite a bit. Also take a mental note of whether or not there is a limit on how much can be transferred. You might not benefit as much as you thought you were going to in the first place. The other rates, like the ones for cash advances or purchases, have a tendency to be higher to make up for the 0% offers so if you honestly want to get rid of your credit card debt avoid these interest rates and don't use the card. Read the fine print. The credit card company may allocate your payments to the 0% balance because they aren't making any profit on it instead of any purchases you make. Avoid this easily by not making any new purchases with this card. Let it serve its intended purpose of getting that debt reduced significantly. Do the math. Write all the figures down (interest, fees, etc...) and make certain that you are definitely going to be saving money by completing the transfer.

Be smart with the cards

Credit cards are a dangerous tool for many people but, in the hands of a well educated individual, they don't have to be. It can be a long and tiresome road trying to get out of debt but take your time and slowly but surely you will arrive at the end.