What Are Balance Transfers

Category: Finance, Credit.

Using balance transfers credit cards, you can move funds from one of your accounts to another.

There are several ways that you can save money by using a balance transfers credit card. The advantage of doing this is simple, especially when you qualify for credit lines that offer low interest or even 0 APR to you. Many people are qualified for these lines of credit. What Are Balance Transfers? If you qualify, use them wisely to save money. A balance transfer allows you to move money from one credit card to another. Balance transfer credit cards are cards that allow you to do this.

In essence, you will pay off the balance, or portion of the balance, from one credit card with the other. Most often, they are done through electronic payments or sometimes with checks that are sent to cardholders. Why Bother With Balance Transfers? In some situations, when you apply for the balance transfers credit card, you can transfer the balance immediately at that time. One of the best reasons to use balance transfers credit cards is to save money by moving money from a high interest rate credit card to one with a lower rate. For example, if you have one line of credit with a$ 5000 balance at 20 percent interest and move it to a balance transfer credit card with a 15 percent interest, you will save$ 250 on an annualized basis on that balance. 0 Percent APR Balance Transfers. A lower rate, even just by a few percentage points, can save you a great deal of money, if the card balance is significant.

Sometimes, the best way to use balance transfers credit cards is through an introductory offer. This period may be for three to six months( sometimes as long as 15 months for the most credit- worthy applicants) where no interest is applied to any card balance that is transferred during the initial application process. Some lenders offer 0 percent APR balance transfers for a limited time for new cardholders. To use this type of balance transfers credit card wisely, first you will obviously want to transfer any high interest rate credit card balances to the 0 APR credit line. That way, you do not have to pay ANY interest or finance charges for that period of time. But here is the key to making this type of offer really pay off: make sure that you payoff the outstanding balance within the introductory period. The savings can be substantial.

Any balance that is not paid off prior to the introductory period ending will start incurring finance charges at the regular rate, which can typically be exorbitant at 17 or 18% and much higher. Be advised, that you have, however to make sure that you pay off the balance before the introductory period expires. Monitor Fees. Most credit cards offer balance transfers these days, but some of them do charge a considerable fee for doing so. With balance transfers credit cards, it is important to consider any fees that might be associated with the use of the card. If you decide to use a balance transfer credit card for an introductory period, be sure that there is no balance transfer fee, and that the introductory discount applies to balance transfers. You can save a considerable amount of money with introductory offers through balance transfer credit card offers, which means that you could be saving a substantial amount right now.

When you use them wisely balance transfers credit cards provide optimum benefits to cardholders.