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Credit cards are very convenient until the time we stop clearing our monthly dues on time. If we fail a particular payment deadline, there is a late fee charged, along with the interest on the full outstanding amount. If corrective action is taken the following month and extra payments are made, you can bring down your debts. If not, then the interest gets compounded, along with late fees if payment in not made on time, thereby increasing your financial burden. If allowed to go beyond controllable levels, these can blow up into huge debts which seem difficult to come out of.
In such difficult situations, a balance transfer can really bail us out. It is a lower rate of interest offered by a credit card to take over an existing outstanding amount on another credit card. It is offered by most credit card companies as a way to take away customers from competitors. They can be offered as regular balance transfer, or you could negotiate to get an offer of converting the old outstanding debt into equal monthly instalments. Some credit card companies also offer interest free options at the time of balance transfer, thus giving you an opportunity to reduce the outstanding dues without paying any interest on it.
When a financial institution or a credit card company takes over your old credit card outstanding, it usually charges a fee for it. The fee is usually added to the present outstanding amount at the time of the transfer of balance.
The credit card company might charge a fixed amount as fee, or it could be a percentage of the balance being transferred. In the case of the fee being charged as a percentage, there is usually a maximum fee that is specified, whatever be the outstanding amount. Alternatively, it could be a flat fee of a fixed amount.
The best way is to keep an eye out for special offers on balance transfers, when balance transfer fees could be substantially reduced, or the credit card company might even offer balance transfer at zero fees. Such schemes are usually announced just before festive seasons, when purchases using credit cards are expected to go up. Another way to get an attractively low balance transfer fee offer is to maintain a very good credit score, in which case the credit card company would be willing to offer you very low fees, or even do away with these fees altogether.
All details regarding balance transfer fees would be clearly explained in the terms and conditions of the new credit card that is taking over your old outstanding. It is better to go through these terms and conditions carefully and have all your clarifications cleared before initiating the balance transfer process.
