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Balance Transfers Introduction
Credit card balance transfer involves using a credit card to pay
off the amount outstanding on one or more credit/store cards. The
total debt then moves to one card.
The main benefit of balance transfer is a money-saving one. In
the competitive credit card market an increasing number of
companies are offering a 0% interest rate for a fixed period on
balance transfers made by new customers. This allows new
cardholders to make considerable savings in interest repayments.
Interest free periods vary and certain credit card issuers extend
the 0% interest rate offer to cover new purchases, it is worth
taking great care to compare balance transfer offers well before
deciding which one to choose.
Some companies offer lower than average interest rates on
transferred balances for the life of the balance transfer. This
may be good news for card users who are not planning to pay back
credit card debt in the short term.
Transferring credit card balances is usually a simple process.
Once a card application is approved it usually involves a phone
call to the new card issuer to transfer the balance(s) from the
other card(s). Many credit card companies also offer an on-line
service, making it even easier to transfer balances via the
Internet.
There is usually a window of time after a new card is approved
during which balance transfers attracting the promotional
interest rate must be made.
A word of caution regarding balance transfers. Minimum monthly
payments still need to be made. Fall behind with minimum payments
and fines can be made and interest free offers withdrawn. The
same can happen if credit limits are exceeded.
In a market full of balance transfer deals, offers vary
greatly. It is important to double-check the details carefully
before signing on the dotted line. For example:
- Are there any additional fees to be paid when balances are
transferred?
- Do I need to make a minimum monthly spend using the new
card to qualify for the promotional balance transfer rate?
- How soon after my credit card is approved do I need to make
the balance transfer?
- What interest rate is charged on new purchases made using
the card? In particular, 'Balance transfer for life' cards
often put payments towards clearing the low interest balance
transfer and not the recent purchases that attract higher
interest
- Do I get charged interest on new purchases from the time
the purchase is made?
- What does the interest rate revert to after the promotional
period has finished
Before taking up a balance transfer offer, also take time to
consider the amount you need to move and how much you intend to
pay off and purchase each month. That way you can be sure that
you choose the right card for you.
The latest balance transfer offers in the UK at the moment can
be seen at
www.1st-uk-credit-cards.co.uk/summary_by_Transfer_Rate.html
Phil Edwards is a Business analyst in the city of London,
freelance writer for several finance magazines and websites and
co-owner of 1st UK Credit Cards
and 1st UK
Loans
MORE RESOURCES:
Credit - Google News
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