Getting the Most Out of A 0% APR Balance Transfer Credit Card Deal
Do you remember balance transfer credit cards? We haven’t seen them around for quite some time, at least not in the numbers we had grown accustomed to prior to the recession. Balance transfer offers were very popular a few years ago, when consumers routinely moved high interest balances to lower interest cards. Depending on the deal, this strategy could potentially save hundreds if not thousands of dollar in interest charges annually. Credit card holders may be able to reap the same rewards today with the return of balance transfer offers. Here we look at what makes a balance transfer offer a good deal.
Low interest rate
Many consumers are struggling to pay off high interest credit card debt. This process can take years if you are only able to make the minimum payment each month. A balance transfer offer on a 0% APR credit card allows more of your payment to be applied toward your balance instead of interest charges. Before considering a balance transfer offer, compare the introductory rate offered to the rates you are currently paying. In addition, determine what the rate will default to once the introductory period expires. If both rates are lower than your current rate, the balance transfer might save you money.
Introductory period
As more banks begin offering balance transfer credit cards, the environment will become more competitive. A more competitive environment will result in better terms and conditions. It is the responsibility of the consumer to carefully compare these terms and conditions to find the best deal. When comparing credit card offers, consider the length of the introductory period as well as the introductory rate. If you are planning on paying off the balance before the introductory period expires, the lower rate will save more money. Conversely, if you need more time to pay off the balance, a longer introductory period, even with a slightly higher interest rate may be more cost effective.
Fees
Carefully review the balance transfer offer to determine what fees apply. Consider the cost of transferring the balance, any annual fees and fees normally associated with a credit card account. These may include over-the-limit fees, late payment fees, maintenance fees, set-up fees and credit protection fees. Remember that these fees will impact your overall savings, therefore the offer with the lowest fees is ideal.
When comparing balance transfer offers, it is important to remember that each situation is unique. The best offer for your situation may not be the same as someone else with different circumstances. By comparing several offers and the terms associated with each, you can select a balance transfer credit card that can help you eliminate debt and save money.
