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Is it wise to open a new credit card account when you are facing a huge credit card debt? Yes it is, if you are performing this act to pay off the old credit card balance and save a whole lot of money on the interest. How it is done? Simply, by transferring the balance of the old credit card to a new credit card account that charges a lower interest rate. This process of transferring the old credit card debt to a new credit card account is called a balance transfer. If you have the social security number or mail box you can have a credit card balance transfer.
Credit card business has grown into enormous proportions and credit card companies are making huge profit out of this boom. Credit card transactions attract a maximum of about 16% annual interest rate. With such a heavy interest rate, it becomes extremely difficult to clear off one’s credit card balance, since the companies keep adding the interest to the principle that multiplies. The credit card companies in order to bring in new customers devised a way to lure them by offering to open a new credit card account with low interest rates for a certain period of time. The harassed consumers not able to manage their existing credit card debts find solace in the new account that allows the transfer of the old debt to the new account.
There are two categories of balance transfers available, one with a fixed rate of interest and the other with a limited duration balance transfer. Annual Percentage Rate charged on a fixed balance transfer account does not change for a fixed period of time or until the account holder pays off the entire balance. The limited account allows a very low rate of interest on the account for a limited period of time. For example, 0% interest rate fixed for one year.
You can also affect online transfer balance. It is done by indicating your choice for online balance transfer while opening the new credit card account. This mode of transfer is also fast and easy to process. In case your credit limit on the new card is not enough to cover your entire old balance, then you must transfer the credit balance that attracts the highest rate of interest first. You can also consider the option of opening another transfer balance credit card account that will allow you to convert the remaining balance to a 0% interest rate.
For a harried consumer, it is a tremendous opportunity to lower the credit card debt burden. With no interest growing on the credit balance, a consumer can pay off his credit card loans with relative ease. When an account reaches the period limit, a customer applying the same method can again open a new account with balance transfer facility. In this way, he/she can pay off all their credit card balances without paying higher interest charges. Also, ensure the closure of your old credit card account when you open a new one. While opening a balance transfer account, make it a point to read all the clauses imposed on the account thoroughly to avoid missing hidden amounts.