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The process of transferring your old balance from your old credit card to a new one to reduce the interest rates is called balance transfer. What`s very attractive regarding balance transfer is the zero interest rate which banks offer the consumers. But is it really a zero interest rate or would there be some hidden fees behind?
We can`t be very careless when it comes to our finances, so here are some useful questions that can help you decide whether balance transfer is a good thing to do:
How does the zero percent balance transfer fee work? Zero percent is the marketing strategy for banks and credit card companies to lure more customers. Who wouldn`t be attracted with a 0% offer anyway? Zero percent interest actually is applied on certain period provided by the bank. This is what we call the grace period. When the transferred balance had been fully paid before the grace period which is normally from six months to a year, consumers enjoy the said 0% interest but when the period is over, rates could be higher; even higher than the normal fees.
What are the factors that make a certain balance transfer credit card a good option? Of course the rates and the benefits that you get from the card determine whether it is a good option or not. You should enjoy more benefits at low rates which could be at times hard to find. And for this very reason, researching and comparison is needed. And it is not just a simple comparison but a good one.
The local banks could be great places but if you like more resources then the World Wide Web has a lot stored for you. Read on the fine print and don`t miss out any clause.
Would balance transfer affect my credit score? The answer is a big yes! It actually could hurt the credit score. Balance transfer makes up about thirty percent of the entire credit score; it is actually a big percentage. When the credit utilization is high, the credit score lowers down. This should not despair you though for if you promise to make on-time payments then this will bring a lot of improvement into your score.
Once you`re done paying off your transferred balance, then try to change your spending habit. If it is not needed, then there is no need to make a purchase. Better save it for more important uses.