- Personal Finance
How Credit Card Balance Transfer Offers Can Help Your Debt Situation
Considering A Credit Card Balance Transfer Offer
Credit card balance transfer offers can actually be a very positive thing if you do your homework and work the credit card companies in a way that will end in your favor. A credit card balance transfer can be what you need to get a lower interest rate for a long enough period of time to be able to put more money towards the actual debt and make a difference in your amount owed instead of feeding so much of your monthly payment towards the accrued interest and always feeling like your just trying to crawl out of a sandtrap.
Before considering any credit card balance transfer offers, you should first assess your current credit debt situation. Is it really necessary to do a credit card balance transfer, will the pro's outweigh the cons, can your current credit card companies offer anything better?
Preparing For A Credit Card Balance Transfer
Before you even begin looking at the current credit card balance transfer offers, you want to get your credit debt information together. You will want to gather the following
- Recent credit card statements
- Medical bills
- Creditor notices
- Anything that incurs interest that you must pay back excluding mortgage and car loan..
The purpose of a credit card balance transfer is to lower your debt quicker by reducing your interest rates and combining into one or just a few credit cards. It is not to try and get ahead by paying your electric bill or your water bill. If you are in serious financial instability then speak with someone to see if this is the best choice for you, otherwise only consider debts for a balance transfer if they have a interest rate higher then what you could get with a credit card balance transfer offer.
What To Look For In A Great Credit Card Balance Transfer Offer
- Low credit card interest rate but with long terms, preferably 12 months+
- Low regular interest rate after special balance transfer period has ended
- No annual fee's
- No hidden fee's
- No credit card balance transfer fee's.
Research Current Credit Card Balance Transfer Offers
There are so many credit card balance transfer offers, you are bound to find one that can fit your situation. Pay close attention to what they offer many credit card balance transfer offers use the following perks to try and get you to sign up
- Short term, generally 3 to 6 months very low introductory interest rate of 0% to 3%
- Moderate term, generally 6 to 12 months very low introductory rate of 0% to 3%
- Long term, generally 12 to 24 months low introductory rate of 3% to 6%
- Unexpiring term as long as all payments are made on time and rules adheared to, anywhere from 0% to about 9.9%
These are just some of the credit card balance transfer offers. Your current debt situation should be considered when choosing which offer is actually the best for you.
Balance Transfer Tip:
To which ever card your choose to do balance transfers, do not make purchases on your balance transfer credit card. Often times the purchases interest rate is much higher then the credit card balance transfer offer that you signed up for.
Most credit cards pay towards the debt with the lowest credit interest rate, so your purchases will accrue at their higher interest rates and you won't be able to touch paying towards them until the full amount of the balance transfer is paid off.
Check The Credit Card Balance Transfer Offer Fine Print
Knowing the fine print of the credit card balance transfer offers should also be considered. Many balance transfer offers require a balance transfer fee. This is generally 3% of the balance transfer up to a certain amount, in my experience $50. This fee and limit is applied not in total, but to each different balance transfer authorized. If your transfering a good amount of money to a card from another source with a very high interest rate, this may be okay for you. In my past, it was an acceptable fee due to the amount I was saving long term.
There are plently of credit card balance transfer offers that offer a "no balance transfer fee" perk. If their rate offer is something that will fit your debt situation, this is the best to look for.
Another fine print
detail to watch out for is a credit card annual fee.
With so many credit card offers available there is absolutely no reason
anyone should be paying a fee just to carry a card. American Express
for example is one that will offer the first year free and then on the
1 year anniversary, will attach a $95 annual fee just to use their card. This is ridiculous. Avoid credit card balance transfer offers that have ridiculous fee's.
How To Benefit Most From A Balance Transfer
You've already added up and analyzed your debt and the applicable interest rates your are currently accruing at. Now it's time to consider the various credit card balance transfer offers available. If your interest rate can be lowered, even with any applicable balance transfer fee's, and it is for a time perioud that you realistically believe you can pay off or down quite a bit before expiring then you may have found a winner. You must also consider however, that if you are not able to pay down your debt before the time period specified offers the great interest rate, will the interest rate you will have to pay afterwards be more or less then what you are paying now?
If you are convinced that you can realistically pay down your debt with the lower credit card interest rate thanks to the balance transfer then go for it.
Remember though, the purpose of getting a credit card balance transfer in order to save money and pay down the debt, will require bigger payments then what is required. The new, lower payment will seem like a cool breeze after paying so much interest previously, but in order to lose the debt instead of continuing to carry it, you really must at least continue to make the same payment amount as the card you were paying previously, or try to pay at least double to payment required. Of course if you can pay more, all the better.