Understanding the concept credit card balance transfer better

Advertising Disclosure

Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many 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 » Understanding the concept credit card balance transfer better

Understanding the concept credit card balance transfer better

Add to Favorites:
A Credit card balance transfer refers to transferring the balance on a credit card account to another credit card account. The process of transferring is very quick and can be completed in an hour because of the automatic services extended by the card servicing company. The process of balance transfer is being encouraged by several credit cards servicing companies to attract new prospective customers. The process benefits the card holders because, the new bank or the new card will be issued with attractive incentives, low rate of interest, high reward points, extended credit limit, validity and many more. On the other hand, the process of credit card transferring the balance is advantageous to the credit card company since the reputation of the company goes up when they gain new customers. However, it will be a negative marking for the prior card company from which the card transfer has been made. The combinations of the following three things determine the balance transfer of credit card from one account to another account. Normal rate: It refers to the common rate of interest of credit card. Lower rate provides higher benefits to the customer and fewer benefits to the company. After the transfer, the normal rate will be applicable to the new card irrespective of the rate of interest of the credit card company. Most of the credit card balance transfer involves in transferring of funds from a higher rate of credit card to the lower or zero rate credit card. Teaser rate: Credit Card Company invites the customers to transfer balance by offering low rate of interest. Zero rate interest is the normal rate offered to the new credit card account. However, teaser rates are temporary. The lower rate is extended for a period ranging from six to fifteen months. Hence the customers should pay attention to the validity period of the low rate offer as the rate of interest may increase suddenly. Fixed rate offer: It is also offered with low rate of interest but the low rate will be applicable until the transferred balance amount is paid in full. This enables the customer to maintain the lower rate of interest for the old debts. Transaction fee towards balance transfer from one credit card to another credit card company will be levied. The fee amount will be determined based on the amount of debt transferred. Hopping strategy Since transferring the card balance always results in lowering the rate of interest, the customer may repeat the process continuously and save a lot of money. The basic idea of transfer commences once the period of teaser has been expired. To safeguard the interest of the credit card company, the contract of transferring from one card account to other may include a clause that stipulates the customer is not eligible to utilize the process for the second time within the stipulated period. The credit card account provides the list of payments in a specific order. The order of payments is basically determined by the rate of interest and lower rate of payment will be sequenced with the higher priority and the payments with higher rate will be generated with least priority.

Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

How to Subdue Wedding Expenses and Earn up to $1,000 for Honeymoon

How to Subdue Wedding Expenses and Earn up to $1,000 for Honeymoon

Posted: June 21, 2017

Whether you are married or not, we all agree that marriage is incredibly important for a person. It signifies the beginning of two people as a team, as a family, of a long commitment. It is a newly born union and the sign of your choice, ... Continue reading
How To Choose The Best Credit Card For Everyday Spending

How To Choose The Best Credit Card For Everyday Spending

Posted: June 21, 2017

When you reach for your wallet to pay for groceries, gas, dinner out, or any other everyday purchase, are you searching for cash, a debit card, or a credit card? Many people hesitate to charge this type of everyday spending to a credit ... Continue reading
How to Save Money. Best Credit Card Deals and Tips.

How to Save Money. Best Credit Card Deals and Tips.

Posted: June 20, 2017

We all've been through or may find ourselves in such an emergency when money is needed immediately. Lucky you are if you have savings for unexpected expenses. If not, it's never too late to start saving money. There are different ways to ... Continue reading