The Best Credit Card

One way to manage a ballooning credit card debt is through a balance transfer credit card. Balance transfer credit cards allow you to transfer part, or all, of your existing balance or debt over from one card to another. This makes sense because the card company that offers the transfer usually offers a lower interest rate or 0% interest rate on the transferred balance. Because of this, you get to save dollars on money that would have gone to interest rate payments should you have stayed with your current card.

You may ask why would companies offer such a card? The reason is tough competition among credit card companies. A balance transfer is a way for a credit card company to get new accounts from competitors. Though they may not make large profits, their chances of earning would be increased if they have more clients. And of course, balance transfers also carry a charge and so the companies do earn a little while also getting a new customer.

Depending on the offer, you can get up to 0% interest on your old balances or new purchases made with the balance transfer card. These rates are usually teaser or introductory rates that lasts from 6 to 15 months depending on who’s offering. Even if you don’t get 0% on the existing balance, you can still get a low interest rate to pay on the balance that you transfer. As mentioned earlier, there are also balance transfer fees which can be 3-5% of your existing balance, or a fixed amount with a cap.

But surely, there’s a catch. Of course, there is. One thing to note is that the offer is also dependent on your current credit score. The better the score, the better the offer. You may find that the offer is for 0% interest, but the fine print may state that it’s limited to those with good credit scores. You may only be eligible for one with a higher interest rate.

Another thing to watch out for is the interest rates and fees that would kick in should you miss a payment. The truth is, these fees and interest rates can be hefty. This makes it all the more important that you keep paying your dues religiously if you don’t want to incur those penalties.

If you have chosen an offer that works for you, remember that balance transfers take time for processing, usually four weeks. Because of this, you should put charging your old card on hold during this period. Additionally, once the transfer is over, you should also consider cutting the old card since that may entice you to use it and add to your existing credit.

Balance transfer credit cards are good ways to address your increasing credit balance. You get to enjoy lower interest rates that can give you enough breathing room to get you balance to zero. But be sure to shop around for the best deal, and, as always, check the fine print. Once you manage to do those, you’ll find balance transfer credit cards to your advantage.