Balance Transfer Cards – How to Make Use of Them

Many consumers today put their faith in credit cards. For some, the trust is a categorical thing. They pay their bills on time and in full month after month to boost their credit scores. They also use credit cards to reap purchase benefits as part of a rewards program. On the other hand, many are not so credit-savvy; depending on credit cards as an additional source of income, which classically has the opposite effect on a credit score.

Largely, credit cards can be gainful, if used correctly. One feature of credit cards that has been misused for long is the balance transfer.

What is Balance Transfer?

This is an incentivized by credit companies where a customer can transfer existing balances from other cards to a new credit card. This consolidates outstanding debt on multiple credit cards, so making it easier to pay off debts with higher interest rates. The flip side? Credit card balance transfers do not come free. Credit card companies usually will allow a balance transfer but charge a transfer fee and other fees for carrying balances over.

Furthermore, the APR on a balance transfer is typically higher than traditional purchases. Many consumers do not realize it because they are usually given a promotional rate that comes with validity. Post promotion, the APR goes way up.

Make Balance Transfer Work!

As cited, balance transfers can be advantageous for those looking to merge debts, making them easier to remove. By removing debts, you can clear out your credit score and reduce your debt-to-income ratio, making it easier to secure financing and better insurance rates in the future. Making one work in your favor is not tough if you stick to a few guidelines.

Number crunching

Before applying, check out the interest rate of the new card. Make sure you are clear on the APR before and after promotion, so there are no shockers later. Check against several cards. It may not be worth it if the fees are higher than you can afford to pay.


Remember you will need to contain all applicable fees in addition to your total debt to get an accurate number. In correlation to the ending date of the lower interest rate, you need to prepare a plan that will coincide with paying off the total balance before the promotional APR expires. Or else you are just totaling more debt onto your shoulders. If you can not create a plan for paying off the full balance in the alloted time period, a balance transfer is not a viable option for you even if it's promotional rate is 0%. If you do not do that math, the chances are good you are not making a financial-savvy move.

Never do a balance transfer without a sincere commitment to eliminating your credit card debt. Treat this as your one chance to pay less for reducing debt. If your plan for eliminating the balance in the promotional time frame, you need to debt all available cash to ensure that happens, even if it means finding a source of complementary income to expedite the process.

Source by Rama Krishna

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