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Switching credit cards has been an all too common practice for consumers. But there are several tips to take note of when switching credit cards that consumers can use to leverage even greater savings than normal.
Transferring your charge card balance to another more attractive charge card offer can be an effective tactic in the charge card debt consolidation process.
Due to the hundreds of debt victims in America, various charge card companies are rabidly competing for your attention in the hopes that you will utilize their products and services. In fact, many charge card companies will actually pay you to transfer your charge card balance to them in hopes of getting your business!
Of course, a person who is struggling with debt will immediately search for other charge cards that offer a zero percent or otherwise low introductory rate. Since the demands of credit card debt consolidation are high, however, there are plenty of balance transfer charge cards to choose from. For this reason, searching for the appropriate credit card transfer plan may take a little work.
The Basics of Balance Transfer Cards
A balance transfers credit card works like any other card. The difference lies only in two important things – the lower APR and the fees associated with transferring the balance. By taking advantage of these differences, if you have several charge cards all with current balances, you can use a balance transfer card to consolidate all of your debt on just a single balance transfer credit card. When this happens, your old credit card balances will stop accumulating interest. The only obligation left for you is to make sure to pay the new credit card monthly. In the best case scenario, you will have the balance transfer credit card paid off before the special 0% APR promo period is over.
The Best credit card Transfer Plan
A typical charge card company offers zero or low intro rates for credit card balance transfers for new customers. These rates usually last for only 6 to 12 months, however, then up goes your apr.
Some charge card companies offer cards that allow the low introductory rate to be extended by simply making regular purchases with the new card. Yet other credit cards offer low-rate balance transfers through the life of the plan until the balance is paid off in full.
Since there are so many different types of balance transfer plans available, it is important to never settle for the first balance transfer deal that comes your way. Look around for charge cards that you qualify for, that can provide the lowest interest rate possible, that have the longest promo period, and that have the fewest extra fees and conditions.
Sometimes, important information that you need to make your decision is found only in the small print of charge card agreements and applications. So, be sure to read all of the information thoroughly because it may save you hundreds of dollars. If you fail to read the fine print, you might discover that your credit card debt actually gets worse!
How to Make the Balance Transfer Work
In order to get the most from your balance transfer, you need the self-discipline necessary to change your attitude towards spending and your management of monthly bills. If you can’t change your lifestyle, the charge card balance transfer may put you in more debt than you started with. Rather than allow this to happen, take advantage of the credit card balance transfer in order to pay your debt off quickly – and don’t keep adding to your debt. Or, set the money you save from your interest free loan for an emergency fund to use rather than your credit card if an emergency does arise.
For the balance transfer to work, you may need to cut up your old charge cards in order to reduce temptations of using them. Assess your spending habits to determine if this is necessary for you.
Switching to Low-rate credit cards
Before transferring your old charge card(s) to a new company, confirm that the issuer of the new card will be offering lower rates once you switch to them. If possible, request that the card waive all transfer fees and negotiate a fixed rate for your transferred balance. In many cases, this step is not necessary because several cards already offer special promotional offers to new customers.
Once the issuer agrees to your demands, you will discover that the same monthly payment actually reduces your debt more because you aren’t paying toward finance fees. As a result, you will be able to eliminate your debt sooner than expected.
If you are unable to negotiate a lower rate, shop around and apply for a new low rate credit card. Remember to avoid several applications for credit in short periods since, however, this can ultimately hurt your credit rating.
For anyone in a great deal of charge card debt, balance transfer credit cards can be a fast and convenient method for consolidating debt. Always remember, however, that balance transfer charge cards carry a fixed time limit or the “low-interest introductory period.” Therefore, it is important to read the fine print carefully in order to know just how long the intro period will last. In doing so, you won’t get caught back up in paying finance charges on high interest rates or returning to your vicious debt cycle.
In my research I have found that Chase credit cards and Discover credit cards have the best balance transfer credit card options.
Tags: balance transfer, credit card balance, credit card balance transfer, debt transfer, transfer credit card balance
Posted in Finances · April 19th, 2010 · Comments (0)