How to Take Advantage of Balance Transfer Credit Card Financing

You get offers in the mail almost every day. They are the downfall of many. The lure of instant gratification has put many consumers into a black hole debt it seems they may not ever dig themselves out of. Credit cards can be the source of financial pains and stress in your life or you can learn to take advantage of the great benefits they offer. Some of the great benefits are balance transfers, rewards programs and cash back programs. I know this may sound crazy but maybe you need to accept one of those offers that comes in the mail.

Balance transfer offers are by far the best benefit a card can offer, but be careful and read the fine print. One quick way to reduce your debt quickly is to transfer your balance from the high interest card you have to a 0% balance transfer card. Remember to read the fine print, some cards charge a fee to transfer the balance. The fee is generally 3% of the amount transferred. Some of the better cards cap the fee and the best cards do not even charge one. Once you have transferred your balance keep paying as much as you can. On a 0% interest card every penny you pay reduces your balance. This is like earning the same rate you were previously paying, which I have seen as high as 24% on some cards. Where else could you get a 24% guaranteed return?

When you have transferred your balance to your new card remember, DO NOT USE IT FOR ANYTHING ELSE! Most cards have a payment structure that will pay the lowest interest part of the balance first, so purchasing that $ 100 tank of gas could end up costing you an extra 15 to 20% each year. Remember to keep the card you transferred the balance from and do not use it either, it might be the source of a future balance transfer when your current one expires. If managed properly at the end of the introductory period, you should look to transfer your balance again to another lower interest card, while continuing to pay as much o the balance as you can. If you are like most consumers you probably have a few different credit cards already, many of which will have similar balance transfer offers.

Once you understand how these works you can essentially pay off your former high interest debts while paying little or not interest as you go. Following these simple instructions could lead to significant annual savings. The following is a chart showing your potential savings from transferring from a high interest card to a zero interest card.

Balance ………………………… Interest Rate …………….. …………….

……………………….. 15% ………… 18% ….. ……. 21% ……….. 24% …

$ 5,000 ………….. $ 750 ……….. $ 900 ………. $ 1,050 …….. $ 1,200

$ 10,000 …………. $ 1,500 ……… $ 1,800 ……. $ 2,100 …….. $ 2,400

$ 15,000 …………. $ 2,250 ……… $ 2,700 ……. $ 3,150 …….. $ 3,600

$ 20,000 …………. $ 3,000 ……… $ 3,600 ……. $ 4,200 …….. $ 4,800

Using a balance transfer properly could add an extra three to five thousand dollars in your pocket each year, and you will pay down your balance faster.

Source by Adam Riding

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