When you have unsettled debts to take care of, any solution will prove to be of some help. One such solution offered by the credit card companies, is the balance transfer scheme. It is a scheme that has many benefits like 0% interest rates for as long as a year, and attractive reward schemes. If you have not heard of balance transfers, then going forward with the process can be a bit challenging. Understanding balance transfers is easy, if you do it one step at a time. If you have more than one credit card that has outstanding credit, then you have to start by selecting the one with the highest interest rate.
Before choosing new credit card for the balance transfer, make sure of the following things:
- It is not enough to have a 0% percent interest for the introductory period. Whatever new purchases you make will not have low interest rates applied.
- All your payment will go towards clearing your outstanding balance and so all your new purchases will be kept pending, and therefore will accumulate interest rates.
- Choose from many options instead of picking the first card that comes your way. Keep the option of negotiating with your old bank open too.
- Check for other incentives like award schemes too. You will need them when you start using the card after clearing your debts.
There is one important factor before you zero down on a card. See whether the card has any charges or fee for the balance transfer process. Credit card companies charge some amount of fee for the process, which can be a huge amount to pay. There will be a fixed amount or a percentage of the amount being transferred. Try your best to locate a card that is free of any kind of charges including the initial transfer fee. Some cards claim to give an interest free period for as long as a year, but will have hidden charges attached so that they make up for the loss. Reading fine print, though a bit of an exercise, is very important, if you want to make a good deal out of the balance transfer.
After you collect all your options, and compare them side by side, go in for the actual process. You will have to undergo some amount of paperwork in order to start paying for the new credit card. Read through your offer and make sure you understand the terms completely before you sign up.