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One of the best ways to reduce your debt and clear is off fast is by opting for balance transfers on credit cards. However, this is possible only if you choose the right credit card for this purpose. Considering the number of options that are being offered by innumerable financial institutions, the chances of you choosing the right one for you needs is bleak if you don't know the basics about balance transfers. Let us take a look at the information that you should know before you go in for one.
The concept of balance transfer will work in your favor only if you get this step right. While opting for a particular card, you should ensure that the interest rate on that card is lesser than that on your current one. There are a number of credit cards that offer a low interest rate only for a short span of time and then revert to the regular APR. Hence, find out for the duration of the promotional interest rate you are being offered. If the bank you are opting for is asking for overhead fees like admin costs and balance transfer costs, then, it is better to avoid such options. There are innumerable institutions that not only eliminate these costs, but also give really low interest rates in order to increase their customer database. Opt for such credit cards.
While balance transfer is indeed a good option to consider, it is not recommended to go in for it often. You should know that this can have a negative impact on your credit score, especially if you opt for the wrong cards. You should be very careful and ensure that you are indeed bringing down your debts and not increasing it, if you don't want it to have adversely influence your credit report.
Most people think that the process is complete if the balance has been transferred to the new card. They tend to forget that the old card has to be closed if the transfer should be considered complete. Not closing your old card can increase your financial liabilities since you will still have to continue paying annual fees on it. Some companies also charge inactivity fee if the card is not used for a long span of time. Hence, ensure you close your old card before you start paying off the balance on the new one.