Balance transfer interest rates are much different than the interest rate charged on your credit card purchases. This is because you are not making any new purchases with your balance on your credit cards and instead transferring the balances to a new credit card with an introductory low interest rate. The advantage of transferring balances is that you can save a large amount of money in interest charges by paying off your debts over a longer period of time, as compared to just paying interest on your credit cards.
When you apply for balance transfers, you will normally be given a promotional offer. It is usually for a period of one to twelve months and you should consider whether the interest rate offered is at a level that meets your credit limit requirements. If you have an expensive credit card balance, it may be more practical to pay off the debt with a lower interest rate than continue to pay high rates. Balance transfers can also help you manage your debts if you wish to do so.
You need to read the small print of any promotional offers very carefully before you agree to take the loan. Some introductory offers may require you to transfer your balance within a specified period of time, such as a minimum of ninety days or until you have paid off the entire balance. Other terms and conditions could have a different effect on your ability to pay the balance in less than the stated time limit.
Balance transfers are usually very easy to arrange. You usually need to contact your bank or other financial institutions that you regularly make payments to and ask them to transfer your balances. They will charge you a transfer fee. The amount of this fee varies between banks. The good news is that once you have agreed to transfer your balances, they are no longer considered open account debts.
It is possible to get a lower interest rate by transferring your debts to another credit card with a zero percent balance transfer offer. However, make sure that you do not choose a balance transfer credit card to pay off the debts you have with your current creditors. This can lead to a consolidation of your debt. Not only can you end up with a higher monthly payment, but you may also end up paying a balance transfer fee. If you cannot find a low rate card with a zero percent balance transfer offer, you can try to negotiate a lower interest rate with your current card company.
You can use an APR balance transfer credit card to save money throughout the promotional period. Keep in mind that the introductory period is going to end, and your interest rate will return to normal levels. Before you apply for a new credit card, make sure that you have enough credit to cover any new purchases that you make during the promotional period. You will save money if you choose a credit card with a low or no balance transfer fee.
Before you sign up for any credit card offers, you should make sure that you read all of the terms and conditions associated with the offer. The APR balance transfer interest rate that you are offered may be a good deal only if you can meet the payment requirements once the promotional period ends. If you are unable to make payments at the end of the promotional period, the interest rate on your balance will return to normal credit card rates.
If you plan to make payments on time, you can benefit from the promotional interest free period. Most balance transfer cards offer a longer interest free period than others. If you repay your balance in full each month, this can help you to reduce the amount of monthly payments that you need to make.