Reasons For Having Balance Transfer Credit Cards

Balance transfer credit cards have been extremely popular among credit card holders because of their rising debt. It is so easy to let your spending get out of hand. It is also easy when you lose a job to rely on the card to get you through. When you get too much of a debt you may be suffering from other issues. These issues are compounded by the fact that you have to pay back the amounts. With credit cards there are always interest rates. These rates will differ from 12 to up to 50 percent interest depending on the card you have. In rare cases you could have a card with a low interest rate of 6 percent. The fact is most of us have interest rates around the 14.9 to 18.9 percent range. This gets expensive.

Balance transfer credit cards have been set up so that you don’t have to suffer the consequences of the high interest rates. With a balance transfer card you will have a zero percent interest rate on most cards for a period of three to fifteen months. The most common balance transfer card is the zero percent interest for 12 months. A lot of cards in this area have rewards such as miles, cash back, and other offers to make them more attractive.

Balance transfer cards can also be for 1.5 percent to 6.9 percent for the life of the balance. In this case you transfer an amount within 2 weeks of the account opening date. This balance will have a specific interest rate in the above range for the life of the balance. If it takes you 20 years to pay off you will only be paying the interest rate offered at the beginning. It can’t change unless you mess up the terms and conditions. You could lose that rate if you make a late or missed payment. You could lose the terms if the transfer doesn’t go through at the right time.

Balance transfer credit cards do have specific terms that you must follow. You don’t want to use the card for anything else until the balance is paid off either. Some cards offer a zero percent for three months on purchases at the same time of the balance transfer deal. What you might not know is that these deals will be paid off second to the balance transfer. In other words the amount that has the lowest interest i.e. the balance transfer will be paid off first. Any purchase that is made in those three months is zero percent, but the regular interest is above 13.9 percent. Since the term of the promotion is shorter this means you will be paying more soon unless you pay off the entire balance in the first three months.

This card can get expensive if used improperly. So be aware of the terms and conditions and make sure you are in the right. It can save you a lot of money and get you out of debt quicker.

Back To Financial News May 2008

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