Balance Transfer Cards – An Introduction
Most credit cards offer the balance transfer facility. Balance transfer means transferring the outstanding or balance amount payable on one credit card to another credit card with a lower interest rate. Before you go ahead and opt for a new credit card, solely because of the balance transfer facility, keep the following pointers in mind.
– Low introductory rates on credit cards last anywhere between 6-12 months. Most of the major credit card companies have zero percent rates on balance transfers. However, one late payment is all the invitation your credit card company needs to increase the interest rates.
– Most low-rate cards levy a transaction fee – usually 3% of the transfer or $5, whichever is greater. Make sure you calculate the cost of 3% versus the amount you will save in interest.
– Ensure that your old credit card company has sent you a billing statement which states that you have cleared your outstanding balance. Make sure this tallies with the billing statement issued by your new credit, which confirms all the balance has indeed been transferred. Only then should you close your old credit line.
– Keep making minimum payments on your old card until you are positive that the transfer has taken place. Do not make the mistake of not closing the credit line on your old card. You might succumb to the temptation of charging credit to your old card and will soon be left with 2 cards and very high debt.
– Ensure that the rock bottom rate being offered is applicable to you also. Offers may boast of rock bottom rates, which shoot up by a large margin after an introductory period. You could qualify for a 5 percent initial rate which increases to 20% after 6 months. Some one else might qualify for a 4 percent initial rate that increases to 15 percent after 8 months. Drive a hard bargain for the best rate.
Other Balance transfer card features include:
– APR rate ranging between 9 – 11 %
– Typically 3 other interest rates offered (Introductory, Monthly, and Annual). The Introductory rate is usually 0%, the monthly rate varies between 0. – 1.5 % percent, and the annual rate varies between 9-11%.
– Minimum and Maximum credit limit
– Cover against online fraud when purchasing on the Internet
– Card replacement in case of loss
– Customer service support 24/7/365.
Despite of the host of credit card related features on offer, the best protection against getting sucked into the whirlpool of credit card debt is to reform your spending habits. Make a keen distinction between needs and wants before your next purchase.
To compare features of various balance transfer cards, visit http://www.smallbusiness-creditcard.com/Low_Balance_Transfer_Cards.htm
Author: Vishal Sampat
The author is an internet marketing consultant and offers search engine marketing solutions to various companies around the world.