The recession left a lot of people in bad finances and despite four years since the economic downturn started, some people are yet to get back on their feet. Before the recession, credit card companies issued their cards without second thoughts to almost every applicant who applied. However, once reality struck and the rate of delinquencies and write offs increased, the lenders realized their folly and tightened their belts. But, they left in their wake millions of customers who had amassed insurmountable debts that were beyond their means of repayment. It is under these circumstances that the concept of balance transfers on credit cards gained prominence. The benefits that come along with this process are many, with a significant impact on the finances of the person applying for it. Let us take a quick look at some of the benefits that you will reap by opting for this.
When a person opts for balance transfers, it is generally transferring the outstanding balance from a credit card with high interest rates to a credit card offering low interest rates. This move will not only bring about a significant reduction in the amount of money to be repaid, but will also reduce the term of repayment, thus helping the person to pay off the debt in full earlier than expected.
The credit score and credit history are very crucial documents that decide the financial well being of a person. When credit card debts are high and the payments are not being made on time, it is definitely going to tarnish your credit history and pull down your credit scores. Opting for balance transfer will give you an opportunity to repair the mistakes you made and improve your score over a period of time.
With balance transfers, you can transfer the outstanding balances on multiple credit cards to just one credit card offering favorable terms. This will ease your financial burden to a great extent. You need not worry about paying dues to multiple banks that charge you an arm and a leg for their cards. Instead, you can focus on repaying the balance on credit card to which all the balances have been transferred. In addition to lowering the interest rates, consolidation of debts will also reduce the number of years needed to repay the balances on the card.