Considerations for Transferring Your Credit Card Balance
Transferring your credit card balance to a low introductory balance transfer card can help you to reduce the amount of interest you’re paying on your outstanding credit card debts. While this sounds like a great idea to most people struggling to reduce debt, there are some things to think about before you leap.
Long Term or Short Term
Most lenders offering balance transfer deals offer cheap interest rates for either short term savings or longer term savings, depending on how much debt you need to repay.
Most short term offers can be as low as 0%, but they might only last for 6 months. When the interest free period ends, the interest rate usually reverts to the higher interest rate, most often the same rate as is charged on purchases made with your credit card.
The long term balance transfer rates tend to offer a slightly higher interest rate, but it’s still far lower than the rate charged on purchases. This can allow you to benefit from a reduced rate for however long it takes you to repay the entire balance amount.
Shop Around
Transferring your credit card balance can save you money, but if you don’t spend some time researching the available offers and checking the various fees that may be charged, you could be spending more than you need to.
Always take a little time to compare balance transfer cards and understand how they may affect your own financial situation properly before you accept any deal.
Double Check the Fees
Transferring your credit card balance to an account that charges a really low interest rate can be helpful, but if you’re not careful you could find your lender charges high annual fees, balance transfer fees or even Reward program fees.
You should also take a little time to check how much interest you’ll be charged once the cheap interest rate offer ends. If you haven’t repaid your entire balance amount by the time the low rate reverts to a standard rate, you could find that you’re paying high interest on the amounts you owe, making it harder to get ahead.
This post was written by...
Timothy – who has written 8 posts on FY Money Box.
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