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It has gotten easier and faster to secure a credit card nowadays but when our old credit cards are facing too high credit debt, some of us think that applying for a new card is a good thing to do. This kind of move to save more money does make sense with a balance transfer. It is very easy to apply for a balance transfer for the basic things you needed are just mailbox and your social security numbers.
One of the biggest industries today is the credit card business. Sixteen percent is the usual annual rate for credit cards and with that kind of interest; it is obviously very hard to pay off credit card debts. The principal balance rises in time with accumulated unpaid charges. Credit card companies are aware of this so they made it easier for consumers to manage their credit card debts with balance transfer.
One of the most effective tactics used by most companies to attract consumers with their credit card is to offer them balanced transfer for free. Your existing balance from your old card will be transferred to your new one and a grace period is given to you to repay the balance with the new company. Balance transfer rate usually play around one, two and even 0%. More often than not, such rates last for six to twelve months after the transfer is made.
For most consumers, balance transfer is the best way to reduce their debts on credit cards. This kind of debt reduction strategy gives a person the chance to apply for a new credit card which offers balance transfer after the old expires. The transfer from the old to the new account will give one a lower finance charge. When you are considering of opting for balance transfer then make it a point to close any or all of your existing accounts.
Balance transfer sure is a very beneficial thing but discipline is pretty much needed. Check the fine print meticulously; you may find yourself paying for too much hidden charges. There are some banks that charge for the balance transfer which could sometimes amount to a certain percentage of the balance that had been transferred. Go for banks that do not charge consumers high joining and annual fee.
Very good things usually come with drawbacks. Most companies offer a 0% introductory rate but if you don`t get that careful then you will just realize that you are paying more that you are supposed to. In most cases, companies offering 0% have very high rates on purchases.
Another drawback is that some banks collect a transfer fee which could tend to be very high if you don`t do a check. While there are companies who charges penalty fee, there are those which don`t. But then again don`t be blinded with this for the original 0% offered to you maybe changed to a higher interest rate.
To avoid more disadvantages and regret, make it a rule of the thumb to keep know everything about balance transfer; both the advantage and disadvantages before using them.