Credit Card Surfing
What is "credit surfing"? To surf for cards is a continuous process to jump from a card of low rate to another one whenever you have the opportunity. But does it make sense to do it.
Switching from one zero interest credit card to another card that has the same interest rate is sensible sometimes but if you maintain balances on one or more cards you can get yourself into trouble. You also need to maintain your interest free rates by being careful not to allow the balance to increase to a point where new credit card applications will be turned down, because the APR is the main factor that determines your expenses of financing and if you get into the position where you cannot switch to another interest free card you will find yourself paying large amounts of interest on a big balance which will be expensive.
How much you save yourself really if you transfer balances from a card to another one? It is worth the trouble to do so and "surf" what cards are available? Let us see how much you would save yourself if you changed 3,000 dollars of a card charging interest at 19.8% to one with an interest rate of 5.9% over a period of 6 months.
If you leave to the balance in the card of 19.8% and beams 6 monthly payments of 60 dollars, the amount that you must soon pay is the sixth 2,934 payment is of dollars. The other way to see this is that you paid only 66 dollars of the original capital (3,000 dollars) after 6 payments of 60 dollars. You can consider it like a payment towards the capital, and the other payments like a position, that is, the gain of the bank in interest, which then make up the bulk of your repayments. It cost 360 dollars to pay 66 dollars of your balance. In percentage terms it means that you repay 18% to the loan and an 82% for interest that has accrued.
Now, we see what happens when we took the supply from 5.9% by the period with the introductory rate of 6 months. If you transfer the balance of 3,000 dollars to the card to a 5.9% and during 6 months make payments of 60 dollars, your balance in the end would be $2,725 dollars. In this case, you will have paid 275 dollars of the loan, which means that 76% of the 360 dollars you have made in payments that made were applied to the main debt, whereas 24% were for interest. This is quite a considerable improvement. By consequence, it is possible to be considered that, unlike the previous case, almost 5 of the 6 payments were destined to reduce the capital, and little more than one was for paying interest. By transferring the balance and taking advantage from the lower rate of interest on the balance transfer the savings were of 209 dollars! If the bank increases the rate when finishing the term of 6 months you are still left with the savings of 209 dollars, because your balance was reduced during the reduced rate of interest period.
In the current market for credit cards there are many banks that are offering zero interest balances transfers with some offering such deals on the APR position for up to 18 months