BALANCE TRANSFER CREDIT CARD
Estimates show that more than 1/3rd to people who use credit or store cards fail to pay their balances in full every month! This by default means that they are all paying interest that the company charges, on their balances. If you fall into this category as well, then there is a way you could save money! Get yourself a new credit card that offers zero or low interest balance transfers.
The way these credit cards work is you get them and immediately ask them to pay off the balance on your old card. With this, the balance on your old card becomes zero and the entire balance is transferred to your new card with zero or low rate interest. A number of companies offer these deals.
The zero rate interest is typically for five to twelve months. If you are confident you can pay the amount in this time, then they are a wise choice for saving money.If you think you will longer to pay the money, go in for a card that offers low rate for the entire life of the balance.
If you are currently paying interest on balance with your current credit card, it makes more sense to transfer balance to another service provider. However, there a few points to watch out for:
Check for balance transfer charges – this is becoming very common as the credit card issuers find ways to recover money that they lose by offering interest-free periods. Fees may range up to 2% of the balance transfer. There still are companies that offer free balance transfer.
Pay off balance every month – despite the fact that the companies offer interest-free period, you still have to pay a minimum balance every month before the due date, else you will be charged interest.
Avoid extra spending on the balance transfer cards – use balance transfer cards to pay off the balance alone. If you incur any other debts on this card, they will not be discharged until the balance is paid off. This is will accrue full interest charges! So do not use this card for swiping anywhere at all. Just pay off your balance thus availing the zero interest facility to the fullest.
Switch again when the introductory period ends – if you fail to pay off the balance and by that time, the 0% introductory period ends, switch to another provider that offers 0% interest. This should happen in the month when the existing card company’s offer is ending. This means, you should have applied for a new balance transfer card with the new company at least 6 weeks before.
