Posted on Friday, 6th November 2009 by admin
A credit cards balance transfer is generally quite an enticing offer. This is especially true for those who find themselves deep in debt with very high interest rates to pay. However, when availing of this offer, you should be aware of the card’s policy, terms and agreement. Be aware of the introductory period and the dollar value of what you can save in order for you to differentiate between an intelligent choice and a bad one.
Availing of a credit cards balance transfer really means moving your balance from one credit card to another one with better interest rates. Remember that creditors make this offer for one basic reason—they want your account. They do this to garner more clients, as well as to earn more profit.
How do they make profit with low interest rates or even 0 interest rates for that matter? Easy, they wait for their clients to make a mistake. In their business, it is easy to take advantage of their customers’ neglect.
1. If a customer is late in paying, the initial interest rate of the credit cards balance transfer will be void. One late payment will jack up the interest rate to a much higher amount not to mention the outrageous service charges for late payments.
2. There usually is an introductory period for 0 to low interest rates offers. After six to twelve months, the interest rate will increase significantly. If the client holds a significant amount of balance after the introductory period, this client will be obliged to pay that interest no matter how high it is.
Of course, aside from client’s negligence and credit card mismanagement, they also make money through transfer fees, annual fees, and other service charges applied to credit cards balance transfer.
When it comes to credit cards balance transfer terms, there are two types of proposals. One is a low interest rate offer while the other is an interest-free period (zero interest rate) offer, both of which have expiration dates. When this period is over, the interest rate will go back to the standard credit card rate. Most times, you will be charged a transfer fee. Usually, it is a percentage of the total amount of the balance you will be transferring to that account.
Remember that credit card companies make attractive offers to lure clients in for credit cards balance transfer. Their only goal is to make a profit. So before you make the switch, do your research and check if this transfer will ultimately save you money. If it turns out that the interest on your old credit card is less than the amount that you will be paying for the transaction fee, unavoidable late payment charges, and the like, then it would be best for you to stick to your old card.
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Tags: Balance Transfer, Cards Balance, Cards Balance Transfer, Transfer
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