So why should you consider a credit transfer credit card? Why would anybody want one? Well, the simple answer is yes and no. Yes, they absolutely should because now you can get a pretty decent interest rate with transfer credit cards. You see, most of these financial institutions realized that folks like yourself and others who have bad credit histories are still applying for credit now. The market has indeed changed!
But why are they offering lower interest rate credit transfer credit cards now when they previously turned down your applications in the past? The truth is they didn't have any choice. Banks and other lenders were full of debt at all levels and they absolutely had to turn away those debtors who couldn't keep up with their payments. They simply could not risk getting even one more debt consumer and so they took action by making you pay more to get rid of the past debts. That's how the economy has been working and it will keep working that way for a while.
With that said, this does mean that there is a chance you can qualify for some really great credit transfer credit cards even if you have a low credit score or have maxed out your existing credit limits already. Now you are probably wondering how you go about qualifying for some of these offers and the answer is very easy. You simply transfer balances from other high interest rate credit cards to your new card. In some cases you may even transfer balances from other banks into your new card.
Of course, it is very important that you make sure you do this right. You don't want to transfer balances only to find out that you are not going to be able to keep up with the payments after a certain amount of time. There are certain criteria that your balance transfer credit cards must meet in order to be approved for the new credit limit. For example, you need to be able to show that you will be able to make your monthly payments when your new credit limit comes into effect. Your new limit will be taken off of the value of your outstanding credit card debt at this point and it will remain that way until you actually pay off the full amount owed.
The first thing you need to look at when applying for credit transfer credit cards is your credit utilization ratio. Your credit utilization ratio is the percentage of available credit actually used by you. For example, if you have ten thousand dollars worth of credit card debt, but only five percent of that figure is actually being utilized, that means you are using fifty thousand dollars of credit per year. If you have a credit utilization ratio of twenty percent or better, you can actually use these cards to your advantage.
The next thing to look at when applying for a credit limit on a transfer card is the type of credit that you currently have. You need to transfer the amount of available credit from high-rate cards to cards with lower interest rates in order to improve credit scores. The easiest way to do this is to transfer the full amount of the balance on the higher interest rate cards onto the lower interest rate cards. Once you do this, your debt is now only being utilized twenty percent of the available credit instead of the full eighty percent. This will help to significantly improve your credit score.
Another thing that you want to look at when applying for a new credit limit on a credit transfer card is the actual APR that you will be paying on the transferred balances. If you are finding that the transferred card balances are being paid in a much lower amount than the original amount, then you can consider changing your payment method. Sometimes a person will be able to take their account to another card provider and actually negotiate a lower payment plan. In fact, some card providers are willing to let you transfer balances and then charge you for the entire amount. You need to make sure to compare the new payment to the old payment so that you will be able to effectively reduce your credit utilization ratio.
The last thing that you want to consider when transferring balances from high-rate credit cards to low-rate credit cards is whether or not there are any fees associated with the balance transfer. While it may be true that you can transfer balances for no cost, remember that you will also be charged interest. Many companies are charging a fee each month for balance transfers. If you are able to avoid fees you can greatly improve your credit score by getting rid of these annoying and costly finance charges.