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Credit card companies offer balance transfer to consumers in order to stay ahead in the competition by wresting them from fellow credit card companies. However, this process works very well to the advantage of a consumer who is already entangled in a web of credit card debt. By opting for a balance transfer a consumer not only pays off their old credit card debt for which he/she was paying a heavy interest, but also is given an opportunity to enjoy an interest free credit for a limited period of time.
However, when opening a balance transfer account a consumer who is in a hurry to get away from his/her old credit card debt should not embrace the new credit card account blindfolded. Consumers must give considerable thought before choosing the new credit card account.
What is a best balance transfer credit card? The one that offers longer period of interest free credit can be assumed as the best. Consumers nowadays have a wide variety of credit cards to choose from. Each has its own set of rules, while applying the interest rate, limit of credit, yearly charges for maintenance, etc. The limit of credit and the rate of interest applicable on a particular credit card determine the consumer’s choice for a credit card. By comparing the interest rates of both the current and the new credit cards one can easily come to know the amount, he is likely to save.
Most interest rates applied on a balance transfer credit card account is for a limited period only. After the introductory period is over, the credit card company in all probabilities will escalate the rate of interest tremendously. So it is important to read the terms & conditions carefully before accepting a balance transfer credit card offer.
When a balance transfer is affected, the credit card company levies a balance transfer fee on the customer for the services. This balance transfer fee is taxable. Most companies waive this fee on the initial balance transfers. A consumer should take advantage of this facility and get a balance transfer credit card account when the offer is still on. A balance transfer fee is a percentage of the balance amount transferred.
A yearly maintenance charge is applied by most credit card companies. For a consumer who has a good credit record, paying a yearly fee on maintenance may not be the best option. It is an unnecessary charge for a good credit customer. A customer with bad credit is likely to invite stiff penalties and exorbitant interest rates and various service fees. These charges mostly are based on risks involving potential write offs. To avoid such predicaments, consumers with bad credit history should improve on their credit rating, before they open a balance transfer credit card account.
A credit card customer is well served to pay his balances within the month or 30 days, or the credit card company will charge interest on this debt. Generally, a full payment of the credit within 30 days is free of any interest. A credit card account that offers balance transfer with a fixed rate of interest is the best choice for a consumer.