Reality Check On 0% Balance Transfers

Category: Finance, Credit.

Broke, and on the, in debt lookout for a quick fix?

Many among us jump at such offers without much forethought. 0% deals on balance transfers or purchases seem irresistible, right? In that case, the offer of a 0% credit card balance transfer is sure to have caught your eye. Well, hereis a word of caution: before investing in this new credit card do not forget to check the interest rate beyond the interest- free period. The Good Life With 0% Credit Card Balance Transfer. Get wise, before this apparently brilliant balance transfer plan gets the better of you. If you have an enormous outstanding credit balance, these 0% credit card balance transfer will seem all the more lucrative.

If you play your cards right, you might even be able to save hundreds of dollars on the interest you pay through a 0% credit card balance transfer. You can have your pick of companies, with many out there offering this scheme. And you can stop worrying about your mounting debit at least temporarily. Despite the obvious attractions, it is worth giving a second thought before you cut up your old credit card to make room in your wallet for the new one. Reality Check On 0% Balance Transfers. Companies often fail to clarify the fine print, hiding those rather unpleasant details which could cost you dearly in the long run.

In other words, in a year the interest will accumulate to$ 10On the other hand, assume you have a credit card that offers you 0% on balance transfers for a period of 6 months. Here is a textbook scenario for you: imagine you have a$ 1, 000 outstanding balance on a 10% APR credit card. If you transfer your balance, it would cut down your annual interest by$ 5Exciting, isn t it? The rate might turn out to be higher, and you don t want to be caught on the wrong side of the tracks with this information. But did you bother to check what the interest rate would be like after the six- month interest- free period? Forewarned is forearmed.

If you were to find that the rate of interest reverted to 25% beyond the free period in the above example, you would end up having to pay$ 125 as interest for 12 months, instead of just$ 100! % Balance Transfer Pointers. You need to plan ahead and not just a day or two before the interest- free period comes to an end. The next time you consider shifting loyalties as far as credit cards are concerned, help yourself byasking these questions: 1) What will be the interest rate once the initial six- month 0% balance transfer period is over? 2) Is it close to my current APR or significantly higher? Will I end up shelling out more with this card over the long haul? 5) Do I want to get into the habit of switching from one 0% balance transfer card to another? What is the net difference? 3) What will be the long- term fallout? 4) What are the total costs of the new card? Remember, if your current card offers a better long- term rate than the new one, it makes more sense to stick with what you have got, especially if you have a tendency to carry card balances on your cards. A balance transfer card has its own pros and cons and if you wish to use balance transfers to your advantage, then you must consider the nature of these" double- edged sword" card options.

Read more...

For The Credit Card Companies, This Has The Happy Side Effect Of Increasing The Total Amount Of Interest They Earn On Your Account - Myrna Bristol's Finance and Credit blog:

Like most things connected with personal finance, the area of credit cards is sometimes awash with jargon and impenetrable language.

Bad Credit May Result From It - Doreen Renken about Finance and Credit:

Credit cards are one of the most convenient ways to purchase these days. No doubt, most of us today opt for credit cards.

And Make Sure You Use Your Credit Card Wisely - Finance and Credit Articles:

A credit card is a very valuable asset for almost anyone. And although it can be an instrument to revolve your credit and budget your finances, it can also cause complicated troubles on multiple debts.