Balance transfers

By: CCN.com One of the most adopted ways of debt reduction is balance transfer. A lot of people, however, also use balance transfers as a mechanism to continue their journey into the debt trap. Here we are going to talk about the scenario where you are actually using balance transfers as debt reduction mechanisms. Newspapers, magazines and television are all full of advertisements on balance transfers. Almost all credit card companies offer balance transfer propositions especially to attract new customers. So what steps should one follow in selecting a credit card to transfer current balances to? Here is a list of steps which will prove helpful to you: Collect all the information about balances that you currently hold on different cards and the APRs applicable for each. Prepare a matrix and ranking of what debt you want to transfer to the new credit card. This will generally be based on the balance on each credit card and the APR. Collect the information about the various offers available in the market including the eligibility or qualification for each offer and the applicable APR, terms of low rates, fees etc. You might want to limit yourself to the leading credit card companies. Eliminate the offers on the basis of your eligibility for the offers. From the remaining offers, prepare a matrix of important information and key features. You can include only those things which are of most importance to you. These will include things like: APR The application fees The period for which the low APR is available The process followed for APR calculation on future payments The long term APR Annual charges Any additional charges Any riders on the service in terms of minimum requirements Modes of payment acceptable If any of them have tie-ups with an airlines/car-rentals/hotel etc which is of your interest. Evaluate the matrix on the basis of the collected information and apply for the card most suited to you Besides balance transfer on your current credit cards, you can also transfer your other high interest debts e.g. car loans or other loans. This is done by means of the credit card company issuing balance transfer checks. Sometimes these checks carry an issuance fee and it's prudent to check this beforehand. All such fees and other charges can easily turn the best looking option to worst. Always read the fine print especially the clauses related to fee structures etc. Some credit card companies present information in a way that looks very lucrative in the first instance. However, when you read the minor details, you find that it's the worst offer of all. Just beware of all the sales tricks when hunting for the ideal credit card. In order for balance transfer to work in your favor, it's essential that you not only develop a good strategy for your debt reduction but also follow it religiously, evaluate it from time to time and revise it if necessary. Once you have done the balance transfer, ensure that you follow good credit card habits and obtain a good credit rating.