Transferring balances Between Credit Cards
Johann Erickson
Understanding transferring balances from one credit card to another can be very confusing and may not help your situation at all. You can transfer your credit card balance from the card you now have to another credit card that offers a low introductory rate. But, before you do this you should learn more about the entire picture.
Some companies offer an introductory rate which can save you some money by transferring your debt from one credit card to another. But, you should learn how long the rate will last and what the rate will be after the introductory rate expires. You may learn that you will in fact be paying more interest than you are now paying. Remember the introductory rate is to get your business and it may not last very long. Then you could be in trouble with the real interest rate that will begin when this special rate expires.
You should also find out what the interest rate applies to. Will it apply to your transferred balances only? What about new purchase? If it only applies to the transferred amount, then any new purchases you will be charged a different interest rate. This can also increase your debt instead of decreasing.
Some credit card companies also charge an annual fee above their interest rate fee. You should find out if there is an annual fee, how much it is and when it will be charged. Late fees and over the limit fees can be another way that you can be charged more money on a given month. They may even charge a balance transfer fee. All of these are things to consider before you decide on transferring balances from one credit card to another.
Some transfer fees can be as high as 4 percent of the balance that you are transferring, while a few credit card companies will cap this amount at around $50 or less, but some do not cap it all.
Transferring balance can be a good idea if you read and understand all the terms and agreements of the new credit card. You can find good deals out there that will help lower your monthly payments because the interest rate is so low, but if they have other fees you may not be any better off than you are not. You could be paying out more than you expected if you do not read all the fine print before transferring those funds.
It is a good idea to transfer your balance if you are sure that the monthly payments will in fact be lower and you will not be paying for several years to come because of the change in the interest rate after the introductory special rate. You should also learn about the annual percentage rate and how it is calculated. Do they offer a fixed rate that can only be changed in writing prior to charging the new rate, or is their interest rate a variable rate that changes with the national average?
Before you just run out and transfer your balances read and learn what it means to you in your situation right now. Will it lower your monthly payments at the present time when times are tough, but increase the monthly payments down the road when your situation has changed? Such as an accident that has caused you to be unable to work at the present time, but you will be returning to work and will be able to pay the higher payments at that time. All of these things should be considered. Not every situation or individual is the same and their debt is the same. What might be perfect for one person may not be for another.
For more information about your credit cards or debt consolidation, please visit us at Helpful Home Ideas.
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Johann Erickson is a contributing writer for sites such as Helpful Home Ideas.
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