Making balance transfers on credit accounts

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Credit Card Applications » Research » Guides » Balance Transfer Cards » Making balance transfers on credit accounts

Making balance transfers on credit accounts

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Nowadays, balance transfers have become a pretty common trend amongst the shrewd customer. This sort of card allows you to transfer an existing outstanding balance from an existing account to a new account, mostly with a different lending company. This could be done for a number of reasons. The first being that you need more time to make a repayment and the second being that you are trying to take advantage of lower interest rates on the new credit account.

Usually, people use balance transfers when they find that they are just paying way too much in terms of interest on their existing credit account. A lot of people have taken advantage of this system and extricated them out of serious debt. All it takes is the research done in searching for a new credit account and the diligence to cut down on further spending till you pay back the amount borrowed.

Balance transfers are a wonderful way of freeing up cash and reducing the interest you pay on the outstanding debt. For instance, if you have an outstanding balance of $3000 on your card and an interest rate of 20%, you are paying $50 every month in the name of interest. And you will also have to pay a minimum due which may be anywhere above $200. If you transfer the entire outstanding onto a new credit account with an interest free period, you need not pay any interest for that time period. And that time period could even be a year. And the minimum due per month could be around $100. Hence you save almost $150 per month. The transfer fee is the only thing you need to worry about. And along with this, you will also need to worry about the time period for which you will have an interest free holiday. If you have not paid back the premium amount within this time period, you will need to find out how much you need to pay as interest. Only after finding out whether this is bearable should you go ahead with the transfer.

Also check for annual fees on the credit account. A lot of credit accounts opened for the sake of balance transfers usually have a hefty annual fee. Try to avoid these as they will eat into the benefit you got out of doing the balance transfer in the first place.

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