Definition and types of balance transfer accounts
Balance transfers involve the transfer process of a part of the balance from one account to another account. The balance transfer can be either in form of cash or credit. This particular process by which the funds are transferred from an account into another account may be in the same institution or may also be in a different institution. Different types of balance transfers do exist. The process of fund transfer may be between two similar accounts or two different accounts. Now there are different types of accounts through which the process of fund transfer is completed. Now the various accounts through which balance transfers are facilitated are credit cards, savings bank accounts, bank account that have a cheque book facility and through trading accounts that are meant for business purposes.
Credit card balance transfer process
A balance transfer is facilitated through a credit card account when a consumer opens up a new credit card account in order to settle his previous credit card debts. Now, after the process of fund transfer is complete, the debt in the first institution gets settled. The new financial institution is liable to get the interest and in such a balance transfer process the consumer owes the money to the new lending institution. A very negligible amount of interest is charged during the process of balance transfer and the lending institutions often provide the consumers with a grace period. A consumer might get the loan from the financial institutions at a meager 1% or 2% rate of interest. Even a zero rate of interest is available in some cases. This offer lasts only till six months after the introduction and completion of the balance transfer process. When the fund is transferred from one account over to another the consumer does not have to pay any extra amount for the balance transfer process. A consumer only needs to furnish details about an authentic security number and the correct mailing address.
Purpose of balance transfer through credit card accounts
Balance transfers are the easiest way of repaying the debts for all credit card holders. With credit cards, having a big business market in today’s world, financial giants do make a huge profit from their lending business. Due to their sky-high rates of interest that keeps on mounting each and every single day, it is very difficult to repay credit card loans.
So, for getting the art of balance transfers correct, you need to put in a lot of planning and sincere efforts. You need to be ware that you do not need to pay any extra charges during the process of balance transfers, because there might be some hidden costs that you will not be able to know right from the beginning.