Friday, July 6, 2012

5 Smart Balance Transfer Credit Card Tips

There's a good chance that a balance transfer credit card will help you if you carry credit card debt. Use a balance transfer card to consolidate debt from your high interest credit cards onto a single low or zero interest credit card. Financial providers offer 0% introductory rates for as much as one year, so you can take advantage of these offers to pay off a sizable chunk of debt.

In your search for a balance transfer credit card, you need to keep in mind that they're not all created equal. To benefit from them, you first have to find the right card and use it the right way when you're approved. Some companies offer some amazing introductory offers that will not only bring you a little closer to debt free, but also give you some additional rewards for signing on. Here are some tips for smart use of balance transfer offers.

Stay Away From Mysterious 0% Periods

The best balance transfer credit cards provide the same 0% period to all approved applicants. Some providers cloud their interest free period in mystery, and the card that arrives in the mail could have a 0% period that might be less than you bargained for. Avoid these providers who state in the fine print that the low rate period will be based on your credit score. Instead, go with a reputable firm that advertises and offers the same interest free period to everyone.

Don't be Deterred By Balance Transfer Fees

All leading credit card companies that offer zero or low introductory rates charge a balance transfer fee. This fee might be somewhere between three to five percent on the amount transferred. The upfront cost might seem like a lot, but is really nothing compared to the money you'll save on interest over that low interest period.

Keep An Open Mind When Comparing Offers

Before you start comparing offers, you'll first have to be honest with yourself about the time you'll need to pay off the debt. Let's say you owe ,000, and plan to pay at least 0 monthly on the debt. You'll need a 12 month interest free period to pay off that debt without interest. In this case, you're better off choosing a card with a higher fee if it gives you more time to pay.

The goal of the balance transfer is to get as much time as you can to pay off the debt before interest kicks in. Keep that in mind when you compare offers.

Keep Your Old Accounts Open

Closing credit cards all of a sudden will negatively affect your credit scores. The main reasons for this are it increases your credit utilization ratio, shortens your history and could give creditors the false impression that you've maxed out your credit.

Keep those accounts open unless you're forced to pay a high annual fee. Then it might be a good idea to close one or two.

Don't Miss Payments

Miss one payment and you can say bye-bye to your zero percent interest rate. Credit card providers stipulate this in their term and conditions, and it's especially enforced on balance transfer credit cards. The bottom line: Make that monthly payment at all costs.

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