How to save money on balance transfers

By Susan Lou, January 09, 2011

Balance transfer is switching your outstanding balance from one credit card to another. This is profitable when the other card issuer offers an incentive or promotion. It is a risk to go for balance transfers too often as it affects your credit score. Therefore when you actually go for a balance transfer it should be a wise decision.

Here are some ways of making a good saving through balance transfer.

Interest on credit card outstanding balance

Good balance transfer offers give you a 0% interest rate promotional period, which could extend between 6 months to 18 months, depending upon the credit rating of the individual. If you have over 2000 dollars of outstanding debt on a credit card and your monthly expenses didn`t permit you to pay off any part of that debt in the previous card; a balance transfer will help you save more than 200 dollars at least, which is quite a substantial sum of money.

Good to avoid stress

Credit card customers are always in the race against their interest rates. A lot of times this interest rate keeps accumulating so much that customers do not really have a chance to address the outstanding debt. Often having a debt with mounting interest rates could be cause of worry and a lot of stress. But with balance transfers that have become synonymous with 0% introductory periods, credit card customers get a chance to address the debt, through a proper payment plan over 12 months, without worrying about the confusing numbers added by the interest every month. This reduces the stress and clutter in your mind to a great extent.

Pay off a part of the debt initially

Some balance transfers are lucrative. However, there is a condition that is sometimes applied wherein credit card customers need to pay off a part of the debt before the balance transfer. This could be a blessing in disguise if you have a massive debt because to get the offer you would push yourself to pay up the money and get your debt down. This could indirectly transform to spending less on other things.

Invest the saving

A lot of people are held back by inertia in paying off their debt. Balance transfer gives them the chance to pay off their debt without interest. It is like an interest free loan. So you could actually invest he interest saving and make a profit.

Susan Lou

Susan Lou is a business consultant with a largest multinational corporation. With a Masters degree in Financial Management and Accounting from Princeton University, she has been an active member of the financial community. She nurtures an interest in writing and regularly writes articles related to finance and business.

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