Credit Card Understanding - Part 2

Balance Transfers

With balance transfers if you can find a card that will not charge you interest for a certain period of time you have a better chance of paying off the balance with minimal cost to you. The trick is to pay off the balance before the interest kicks in. There is usually a fee for a balance transfer of 2.5 to 3 percent, but some cards on the market will waive this fee.

HSBC has a card the offers a 2.9 percent APR on balance transfers for two years with a 2.5% fee for the transfer. Both of these options will save you money when you calculate the interest you are paying now. The HSBC deal is more expensive than the Abbey deal with zero percent interest. This is because you are being charge the fee, which means you are being charged 5.5 percent APR over the two years. They are both still great deals. You just have to decide which one you will qualify for and go for it.

Some cards have the balance and purchase introductory rates. This is not a good card to have though. You should either use it for the balance rate or the purchase rate, but not both.