With so many financial products and options, your proper judgment may easily become clouded especially if you have limited information on certain offers.
Nevertheless, it’s important to carefully review each product and opportunity before entering into any financial agreement.
Now, credit card balance transfers are quite popular, and while they might help you get a fresh start towards a debt free life, they aren’t ideal for everyone.
Here is brief look at balance transfers, how they work and who they are really for.
What are balance transfers?
As the name suggests, a credit card balance transfer simply involves transferring your credit balance
from one card to another. It involves applying for a new card and then requesting your old card balance to be transferred to the new card. This is only possible when using different issuers; you cannot transfer balance between cards from the same issuer (same bank).
Why consider balance transfer?
There are many benefits of credit card balance transfers. However, the main advantage has to do with reduced interest rates. If you currently own a credit card with high interest rates on your debt, you can transfer your balance to a new card with lower rates. This reduces the total amount you pay back to the lender.
Another benefit of balance transfer is that most offers come with various features to make debt repayment a painless process for the customer. For instance, most will include an interest-free period that can be as long as one year. You can take advantage of this interest-free period to significantly reduce your debt or clear it altogether.
How balance transfer works
The process of initiating a credit card balance transfer is quite simple. All you need to do is log in to your online bank account and apply/request for a balance transfer. Alternatively, you can call the contact number provided at the back of your current card to inquire about balance transfer.
Usually, you will be charged 3-5% of the amount you want to transfer as a service fee although not all issuers charge transfer fees. You will be allowed to determine how much balance you want to transfer to the new card.
Nonetheless, there is a cap attached to the maximum amount you can transfer depending on the issuer’s policy and your credit limits.
Summary
Balance transfers offer a lifeline to reorganize your finances and free yourself from debts without having to pay high interests. However, not every situation will benefit from a balance transfer. Make sure you do all your calculations and determine if this is the ideal solution for your current situation.
When looking for a credit card balance transfer, it is important to compare your options. The two crucial features to look for include lengthy 0% interest duration and zero annual fees.
You can read more about balance transfers and share this with your friends on Facebook or social media to give them a fresh start.
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