The content is accurate at the time of publication and is subject to change.
Credit cards are a major hit among the masses. It is a convenience you can enjoy today, with a promise that you will pay tomorrow. Unfortunately, many of us get so carried away with the enjoyment that we have huge credits mounting and repayment becomes a problem. With the high interest rates, no matter what payments you make, you may only have touched the tip of the iceberg!
Credit card balance transfers are an easy way out of such a situation. The main advantages are as follows:
By opting for a balance transfer, you will be avoiding the high interest rates that you have to bear. The new card or less frequently used card on to which the balance is getting transferred may be charging you a low rate of interest or even a zero percent interest. Of course, the new account will have a grace period within which they will charge a meager or absolutely no interest, but will go back to the normal rate of interest after the grace period.
When you make a balance transfer, you gain more time. You can arrange for the balance transfer exactly when the old account is about to expire. With the new account you get the grace period which gives you time to repay the loan. Meanwhile, you can make the payments to the old account and close it.
The credit card companies are surely making money when they work on your balance transfer, but there is usually a cap on the amount they will charge during the transaction. The transfer charges will be based on the amount that is getting transferred to the new account. These charges are almost always lesser than the rate of interest you will have to pay if you stick to your old account and hence it works to your advantage.
If used wisely, the credit card balance transfers will help you avoid earning bad credit scores. Instead of faltering with the payments due to the high rates of interest, cleverly managing them with a balance transfer is easier and less painful. Once you earn a bad credit history, getting loans from any bank would be a difficult task and this should, hence, be avoided.
Credit card balance transfers are yet another way the credit card companies woo their customers, but it works out to our advantage if we can use this facility right.