Choosing the best balance transfer card can sometimes be a difficult decision, but it’s important to spend some time searching for the right one to suit your needs. While many balance transfer cards look great on the surface, you should look at some of the other features that could affect your account later.
Choosing the Best Balance Transfer Card That’s Right for You
Choosing a balance transfer card needs to be a decision you make only after you’ve done a little research. Before you sign up for the first balance transfer offer you see, take a little time to understand how consolidating your balances could affect your finances. While it’s true you could be saving money by rolling your outstanding credit card debts over to a lower interest rate, this doesn’t always mean it’s going to be the best option for you.
Here are some things to consider before you transfer:
Is a Transfer Really Necessary?
If you only owe a small amount on your credit card, then you may not need to transfer your balance at all. By the time you pay the transfer fees and charges, you could end up not saving any money at all.
The easiest way to tell if you really need to be choosing a balance transfer card at all is to be realistic about how long you think it will take you on your current budget to repay your current outstanding debt. If it’s longer than 6 or 12 months, it might be worth looking into transfer options.
How Long Will It Take to Repay the Balance?
If you’re thinking of accepting a 6 month balance transfer offer to take advantage of the low rates for that time, it’s vital you be honest with yourself about the likelihood of paying off that balance before your interest rate reverts to a higher rate at the end of the cheap rate term.
If you’re the type of customer who carries a large amount of credit card debt, you might find it better for you in the long run to opt for a 12 month balance transfer rate or even a cheap rate for the life of the balance transfer amount.
This will give you a longer time to repay the balance while still benefiting from the cheap rates.
Have You Done Your Research?
The reason banks and credit card lenders offer such low rates on balance transfers is because they know a large percentage of customers won’t repay the entire balance before the account reverts back to the higher interest rates. They get to charge you more money and you get to stay in debt a little longer.
If you know you’re going to take longer than the introductory period to repay the entire balance amount, then look closely at the fees and interest rates you’ll be charged on the amount you’ll still owe when the cheap rates end.
Choosing a balance transfer card doesn’t need to be difficult, but you should spend a little time making sure you’re making the right move before you sign.
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Posted on Tuesday, April 27th, 2010 at 4:34 pm
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