Balance transfer means transferring the balances of your high interest credit cards to a balance transfer credit card that charge a lower or zero interest rate. After you transfer the balance, you must come up with a budget plan to cut down your expenses so that you will have more spare money to pay off the debt faster. If you pay off your debt via the conventional method, you will have to pay a lot of interests.
If you opt to settle your debt via balance transfer, you will be able to enjoy 0% interest during the introductory period. The introductory period vary across different credit card companies and range from 6 months to 21 months. Most cards will charge you with a balance transfer fee, which is usually a small percentage of the balance you transfer. You should do some calculations so that you know how much balance transfer fee you need to pay. If you see it this way, you will have save about $1,000 in interests when you keep on making repayment on time.
Balance transfers should not be seen as a shortcut way because it is still up to the person to set aside the money to pay back the debt every month. You must keep in mind that you will have to pay the normal interest rate if you fail to clear off your debt within the introductory period. Besides, if you don’t pay back, they will remove the 0% interest incentive and you will pay the normal interest rate.
The first step is to find a balance transfer credit card that you will get qualified for. Most cards require a good credit score so there is a lower chance of getting approved if your credit report shows a poor credit rating. If possible, you should sign up for a balance transfer credit card with a length introductory period of up to 21 months. If you don’t have confidence that you can settle your debt in 21 months, you should find a card that charge a low APR after the introductory period ends.
You must choose a card with an introductory period that is long enough for you to settle your debt. Another thing is that you want to find a card that does not charge any annual fee. You should avoid cards with annual fees unless they come with some extra benefits that make it seem worthwhile to sign up for it.
In conclusion, a zero percentage balance transfer credit card can help you to eliminate your debt if have good spending habit and won’t be tempted into charging your card again for additional purchase. It is important to find out all the fees you have to pay and understand its terms of conditions prior to signing up for a balance transfer credit card.
Stay tuned for the best credit cards and finance offers in 2016 as we sort through the top card offers in the industry to help consumers save money all year round!