Balance Transfer – A Boon to The Wise

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Balance Transfer Cards » Balance Transfer – A Boon to The Wise

Balance Transfer – A Boon to The Wise

There was a time when not being able to pay off debts on a credit card would result in your entire financial future being jeopardized. Using the balance transfer option wisely would ensure that this would not be the case. The balance transfer option is a way to transfer your outstanding balances on a credit card onto a new card. This way you would have more time to pay off your debts. It is also a very useful option if you own a high interest rate credit card and wish to reduce the interest premium that you are paying by transferring to a low interest credit account. There are also other uses to the balance transfer option; you can pay off emergency expenses with your old credit card by transferring the outstanding balance to a new credit card. This way, you can always be ready for any emergency expenditure that might come up all of a sudden. But before utilizing the balance transfer option for any of these cases, it is important to understand the consequences of doing so. Firstly, you need to study your new credit account in detail before going ahead. If the new credit card account has administration fees, account opening fees or other hidden charges, you will end up paying more than you expected. Also ensure that the new credit account has a lower interest rate or even better an interest free period during which you need to not have to worry about the outstanding balance. Also be aware of how a balance transfer can affect your credit score. Frequent balance transfers can adversely affect your credit scores. But the first time you do it, it will actually increase your credit score marginally. This is because when you open a new credit account, your debt to credit ratio will go down. The lower your debt to credit ratio the better. Hence it is important that you do not close the old credit account, because this will actually adversely impact your credit score. Closing a long standing account is a very bad move and can affect your credit score. When you get a new card, you might be enticed into using it in order to make purchases so that you may claim the reward points. But do be aware that doing this can put you in greater debt. Start making new purchases only after you have cleared out your balance. Using your credit card to accumulate reward points is a very good way of using your card to the maximum potential, but do be aware that you need to pay it all back at some point of time. As long as you can manage the repayment, you should not be in a position to make a balance transfer in the first place. Always keep the balance transfer option as a last resort. Do not keep that as a ready stand by for any and every purchase that you need to make. If you do this, you will end up having a number of credit cards with outstanding balances and no finances to pay for them all.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Top 5 Cards for Travel from Our Partners: Spring 2018 – Expert Choice

Top 5 Cards for Travel from Our Partners: Spring 2018 – Expert Choice

Posted: February 12, 2018

Days are getting longer, snow is melting and you already feel the lightest breath of warm breeze on your face - spring is here. Summer holidays are looming, and so is Easter with its shopping. You can lift in spirits and let CreditLand ... Continue reading
Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Posted: February 10, 2018

If you're trying to find the perfect rewards credit card, you might feel like you're drowning in options. There are just so many out there, and many of them look similar. This can make it tough to decide on a card. One thing people often ... Continue reading
Price Protection: Credit Cards That Will Refund a Price Drop

Price Protection: Credit Cards That Will Refund a Price Drop

Posted: February 8, 2018

Those who often find themselves buying stuff and then discovering that they could pay less for the same item they've just bought, will appreciate this credit card benefit – price protection. This is the least known and the most neglected ... Continue reading
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!