Balance Transfer Benefits
Anyone who has one or more credit cards reaching the upper spending
limit may think that opening yet another credit card account would be a
bad thing to do. If you were considering this as just another way to
obtain more credit, then yes it might be a terrible idea, but on the
other hand, if used correctly, it could be a major boon. Confused? Then
read on.
If you have a credit card, and are currently finding the monthly
repayments painful, it could pay you to search about
for better credit
card offers, with a lower overall interest rate. If you are
successful in find the right kind if credit card, you will then be able
to take advantage of the balance transfer facility. A balance transfer
is a term used to describe moving the money you owe on one credit card
to a different credit card. If you move this debt from a card with a
higher interest rate than the card you are moving it too, you will have
lower monthly repayments. A low
interest credit card may have an interest rate as much as 50%
lower than the average Australian credit card rate which is now over
20% following recent rate rises.
The benefits do not stop here however. Most major card operators will
usually have some form of special offer for balance transfers. It may
be that they will accept the debt at a lower rate, or they may offer to
transfer the debt for free, the most common form of offer is a vastly
reduced interest rate for a set period of time on all balances
transferred. It is not uncommon to find the major players offering up
to a year, at an interest rate as low as 1%, obviously this can
represent a major saving.
If you do make a transfer in this way, you need to be aware of one
fact. Balances are removed from your card in a specific order, and it
is likely that any purchases you make on the card you have transferred
the balance too, will end up at the end of the repayment queue, many
providers place cash advances, which are liable for maximum interest
rate, right at the end of the queue. Because of this it is advisable to
use a single card for balance transfers only, and never use it for
normal purchases.
For additional information on credit cards or related topics please visit our library of credit card articles.
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