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Research: Availing balance transfers made easy -

Applying for a new card would be the most undesirable thing to do especially when faced with huge credit card debts. However, the only time when this would make sense would be while doing a balance transfer. Cards are big business these days and companies make a fortune out of the finance charges on the card. While the annual APR is around 16% it is huge money for lenders. With such high interest rates it is certainly going to be difficult to pay up the debt on the card and added to that is the principal amount. Balance transfers are the only way out of a bad debt.

Firstly, one has to pick and choose the right card. Most card companies try to lure customers with freebies on balance transfers. Free balance transfers are offered by many card companies. Once that is done the company offers a grace period of about a year to pay up the dues where there may be zero interest charged for about a year. This period is called the introductory period and typically lasts for about 6 months to a year. The smartest thing to do would be to try and clear the balance before the end of the introductory period and avoid the extra interest. All the balances should be cleared and nothing should be carried forward beyond the one year grace period.

However, if for some genuine reason one cannot clear the full balance or if the debt is very high and if one is certain that it would not be cleared within the grace period then it would be wise to move onto another card and do another balance transfer and avail of another year's grace period.

One has to be extremely cautious while choosing the card. It is advisable to read the fine print as there could be many hidden charges on the card. There are banks that charge a transfer fee which would be a percentage of the balance transferred. One must ensure that there is a cap on that amount (maybe $50 or $75 and not more than that) otherwise one would end up losing around $250. One must also ensure that the annual fee or the joining fee is not very high.

Balance transfers could be pretty versatile and help serve in various ways. In some cases, people struggle with high interest rates and credit card debt but still manage to maintain a pretty decent credit rating or a credit score. In such cases on can shift the debt onto 0% balance transfers and thus cut back on the high interest rates and yet continue to work on gradually clearing off the debt. This is the most viable option to sail through unforeseen financial emergencies. It is important to read the fine print as many companies would offer a 'No balance transfer fees, but one should not get carried away'. If that is the case, it would clearly be stated as follows "No balance transfer fees are associated with this offer." One has to pay attention to this line and then take a call on this.