What are Zero Balance Transfers?
Many banks offer zero balance transfers from your old credit
card to a new one. Balance transfer for credit cards means
transfer of your credit card dues from a high APR card to a low
interest or zero interest credit card. In certain cases, balance
transfer also involves transfer of funds from a bank loan
account to the credit card for a specified period of time. Such
loans have a low or 0% interest.
Most people desire a credit card with a low interest rate or APR
(Annual percentage rate). However, if you have already taken a
credit card with a high APR, you can still enjoy 0% APR by
getting a balance transfer. Yes, the competition among credit
card issuers and their desire of having more card members have
resulted in number of offers where the card issuing companies
makes attractive offers for balance transfers. Some of the
balance transfer offers are 0% APR on balance transfer, no
interest balance transfer or offer for credit balance transfer
rewards.
Usually balance transfer is undertaken when there is an
outstanding balance on credit cards even after making regular
monthly payments. This amount is transferred to another credit
card without inviting any interest for the period of offer.
Before you avail 0% on balance transfer, keep in mind that you
should have at least made the minimum payment due on your credit
cards. However you should not make balance transfer a habit if
your debt is increasing.
Applying for Balance Transfer
Once you have created an atmosphere of trust with a favorable
credit history that you can apply for a no interest balance
transfer or balance transfer with 0% APR credit. Normally, you
will get a 0% APR on a balance transfer for a maximum period of
one year. If you are interested extended duration for 0% APR,
you can avail offers such as Chase Platinum Card offering 0%
interest up to one and half years. If you maintain good credit
and have organized yourself well you can get credit balance
transfer rewards moving from one card to the other and closing
the account before the lender starts charging higher interest.
Avoid Default Rate
While going in for a no interest balance transfer you must look
into the various benefits associated with it. A 0% APR on
balance transfer would be the most desirable with a long period
of offer. You should also be cautious about any hidden costs and
the handling charges attached with the balance transfer offer.
However, if you falter on your monthly payments, you will loose
the benefit of 0% interest and end up paying a default rate,
which is usually a whopping 30%.
Though most of the credit cards will not penalize you for one
late payment but if you are not having good track record, then
even one late payment will invite the 30% interest. Until and
unless there is no interest on the balance transfer it is not
advisable to go in for new purchases with a balance transfer
card. You can save yourself the trauma of being burdened with
30% interest by going in for automatic payments through your
bank.
This is the best way to make the payment. You will save
substantial amount of money on interest. You should also make it
a habit of getting your credit report for a thorough scrutiny of
any mistakes even though you may have been careful of not going
into bad debt. With careful planning you could enjoy the
benefits of the credit card without loosing your hard earned
money in interest paybacks
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