Transferring Your Credit Balance

Category: Finance, Credit.

Credit card issuers keep on adding new features to credit cards to woo potential customers.

You can transfer your outstanding card balance( or balances) from your higher interest credit cards onto a balance transfer credit card with a lower introductory interest rate. A credit card balance transfer is one among them. American Express was the first credit card issuer to adopted this strategy and other card issuers quickly followed suit. The annual percentage rate( APR) is the interest rate that a credit card user has to pay for carrying over a balance, transferring a balance from another card, or taking out a cash advance. To understand the balance transfer process, you need to understand the various terms associated with balance transfers such as APR, introductory rate and, annual fee balance transfer fees. Depending upon the specific card offer, some credit card companies will also charge an annual fee just for card membership.

An introductory rate is a special annual percentage rate( APR) for a limited time. Unless the card has a significant rewards offer, you should avoid balance transfer cards that require an annual fee. If you have a good credit history, you may get the benefit of low introductory rate for a longer period than cardholders with poor or suspect credit histories. As long as you pay credit card balance in full each month, you should not have to bother with balance transfers. Transferring your Credit Balance. Unfortunately, credit card debt can build quickly if balances are not paid in pull, but if used correctly a credit card balance transfer can buy you time so that you may pay down the debt without incurring exorbitant finance charges.

But you should carefully investigate and research the terms and conditions of your new card to avoid things like balance transfer fees, penalties and surcharges that some cards will employ. Balance transferring is as simple as filling out the application of your card issuer of choice. Card companies like Visa, MasterCard and Discover, American Express have many different kinds of cards and many of them have attractive balance transfer features. How long the introductory rate last? Some questions that you should asking about balance transfer cards: What is the ongoing APR of the card after the introductory rate expires? Will I be able to payoff the balance transfer by the end of the introductory APR offer?

Are there any balance transfer fees? Does the card offer an introductory APR on new purchases as well as transferred balances? Are there any hidden charges? If you plan on carrying the card balance past the introductory rate offer, this particular balance transfer offer may not be suitable for you. Some credit card issuers will whack consumers with significantly higher APR s after the introductory rate expires. In this case, finding a card that offers both a balance transfer offer with a lower ongoing interest rate is the most ideal solution, particularly if you are unable to pay off your debt within the introductory period.

Many credit card companies will often charge fees for balance transfers. At a minimum, you should select a card that offers a competitively low introductory rate that lasts until you can pay off the amount you transferred. You should be very cautious when selecting balance transfer credit cards that charge transfer fees, which can be significant. Stick with the balance transfer offers that do not charge you fees. There are a wide variety of card offers that either do not charge transfer fees at all or have nominal transfer fees that are reasonable. Additionally, you should also find a balance transfer card that gives you the freedom to transfer balances throughout the introductory period, not just when you open the account and do the initial balance transfer. It does not mean that you can avoid paying your debt.

Most of all, do not misinterpret the thought of balance transfers as a way to escape your debt obligation. It simply provides you more time to pay the balance off without incurring steep finance charges. For example, if you pay only the minimum after transferring your card balance and do not pay down the card balance by the time the introductory offer expires, plan on paying out significantly more in finance charges. But if you are not careful, utilizing a balance transfer irresponsibly can often times add significantly to your debt burden.

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