Each one of us has taken a loan of some kind or the other. We pay monthly interests on the loan amount. The interest rate charged by the bank on the loan amount varies from one credit organization to another. The more the interest rate the greater will be the loan accumulation at the end of the month.
Balance transfer is a financial option that gives the debtors the opportunity to transfer their remaining loan amount from a present account to another with lower interest rates. The benefits of balance transfer are as follows:
1. The institution that the customer has opened the new account with will provide 0% interest for a particular time, as a part of the promotional package.
2. The grace period for % balance transfer can be extended once negotiated.
3. Debtors get to pay less and save more.
The above advantages of 0% balance transfer can be made to work and earn profits.
Steps in which the advantages can be utilized
1. Read the fine print of the new account to understand the duration of the grace period for which the bank will be charging you 0% on the balance transfer. Once the grace period is over, the bank starts charging the usual interest rates on the remaining loan amount. A debtor should bargain with the bank official to increase the grace period for 0% interest rate.
2. Some banks have a hidden charge for balance transfer. Make enquiries about them before transferring the remaining balance. The hidden charges should be discussed, in order to calculate the final amount charged for the balance transfer.
3. If the amount of fees charged for the balance transfer is more than the money saved with 0% interest for a particular grace period, then the transfer is not worth doing.
4. The other way by which one can save from paying high interest rates, is by paying your balance on time. Since, the grace period for 0% interest on balance transfer is not extended for long, therefore a debtor must try to pay off the loans before the grace period is over.
5. Some banks have tricky terms and conditions. They charge fees in case the account holder pays off his debt before the grace period is over. Make sure that the term is nullified before you open an account for a balance transfer.
0 on balance transfer can save a lot of money paid as interest to the bank. This money if deposited separately can accumulate in to a good amount. Good planning can help in taking advantage of such offers.