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Research: Balance Transfer and its Benefits for Excellent Credit Rating Customers -

Balance transfer credit cards are coming back in a big way. During the economic crisis, balance transfer credit cards were pulled out of the market by the card issuers. But with things looking up once again, and credit card issuers vying to get the customers`, balance, credit card offers are being used extensively as a strategy. Obviously, the terms offered to those customers who have an excellent credit rating are much better. Balance transfer credit cards offer some real benefits to such customers.

Interest free loan for a year or more

If you have an outstanding balance of about 2000 dollars, and there is a balance transfer introductory interest rate of 0%, you can effectively invest the 2000 dollars elsewhere. Even if you make 4 - 5% on your principal, you will be earning a good hundred dollars without really doing anything. In a way, this is like an interest free loan and you can use the amount for any emergency expenses you may have to take care of.

Clear the debt once for all

Most credit card balances are hard to pay back, because the interest is constantly accumulating on the principal making it difficult to estimate how much money you would need to stash away every month in order to pay back the debt. With a 0% balance transfer, you have a stable debt, where you can plan the repayment of the debt properly by calculating how much money needs to be saved every month. This will also motivate you to get rid of the debt as soon as possible without having a revolving debt, month after month.

Rewards on your card

Although the main purpose of balance transfer offers is to give credit card customers the chance to pay back their debt without worrying about the interest rates, some balance transfer credit cards also offer decent credit card rewards to the customers, especially those with excellent credit rating.

0% Rate on new purchases too

The best credit card customers also get attractive offers like 0% APR on new purchases as well as on balance transfers. This could be a great way in saving a lot of money. Imagine a case where you don't have any outstanding balance. If you have to go on a vacation or buy something big with your credit card amounting to over 5000 dollars, you will save more than 500 dollars over a period of one year, if you can save your money in a certificate of deposit for a year and repay it at the end of the term period. It is therefore like a personal loan where you don't need to pay the interest rate at all and use the principal instead to invest somewhere else and make some quick earnings. Some of the best balance transfer credit cards offer the introductory rate for much longer than a year, sometimes up to 18 - 21 months as well, which is ample time to pay off your debt.