Balance transfer is a novel method of getting yourself out of a financial rut when there is no other escape from it. The current financial crisis that has plagued the world is putting a lot of people into tremendous hardship. People who had well paying jobs with six figure salaries are now looking at checks from the local government assistance packages. And kids who are just out of college are finding it extremely hard to even land a decent internship and have to end up settling for unpaid tenures just for the experience. And all of this started due to an inability to repay loans.
Repaying a loan is all about planning and financial management. You need to budget your expenses such that you do not spend more than what you earn per month. A lot of people find it really hard to do this. if you have an outstanding balance on your credit card with the due date fast approaching, you need to take the easy way out by going for a balance transfer. There are a number of repercussions if you do this, but all the same it is the only way out for most people.
A balance transfer is all about opening a new credit account and transferring your outstanding balance from an existing credit account onto the new credit account. This will give you some more time to make a payment to the new bank on the outstanding balance. But in order to get a new credit account with decent terms and conditions, you need to have a good credit score to start out with. This means that you must have been paying all your dues in time till the sudden adversity that you are now facing. Else you will get a credit account with an interest rate which is much higher than that of the current credit account and you will end up paying a lot in interest to the new bank.
You can also do a balance transfer if you have a credit account with a high interest rate and wish to pay lower interest. But in order to do this, you need to shop around for a low interest credit account. But whatever the case, always try not to start using your new credit account from the word go. You first need to repay all your outstanding balance on the new credit account before you make new purchases. If you do not follow this, you will find yourself in the same vicious cycle over and over again.