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Balance transfer is still one of the best ways to reduce the burdens of high interest credit cards. Furthermore, these cards make it easier for you to pay debts, adding more time for you to come up with an amount to pay your current bills. But choosing the best balance transfer credit card remain to be the one of the difficult choices to handle in your financial life.
There are a lot of zero interest charge balance transfer cards, but not all of them promise a good way for you to save. Sometimes you end up having a bigger debt than you used to. So what should you do battle your way to getting a profitable balance transfer and avoiding the pitfalls?
1. Compare the life and fees involved in the credit cards.
If you have a lot to pay, choose a period which can give you the appropriate time for you to come up with the amount enough to cover your current bills. Three months may not be enough for some, but shopaholics might need more months to be added on top. Also look into the interest rate after the zero interest rate. Be prepared of the "real" interest rates and keep your balance low until the maturity of the promotional interest charge-free.
2. Learn to stay liquid.
Liquidity refers to your status of having available funds anytime. Liquidity may also involve temporary but short investments that have no restrictions. Money market mutual fund with at least thirty days as a term is already liquid. For thirty days, you will set aside your funds and it will earn interest. The interest may be so small, but at least it made your money grow. Aside from that, you may want to put the money in an online savings account that offers high interest. You can put on your money on a short term or long term basis, careful not to withdraw most of it or all of it. Interest rate of this account is smaller than the money markets but it allows you to do anything with the funds.
The more secured investment you can enroll your funds into is the short term certificate of deposit. This has a very high interest rate and you can choose the term from 30 days to one year. The most secured but lowest paying investment vehicle is the short-term Treasury bill. The government will be borrowing it from you so that means you will be guaranteed of the whole amount. By investing your funds in an investment vehicle, you will be growing your funds to cover more debt and even to increase your credit score.
3. Be organized.
If you hold multiple credit cards at the same time, keep track of each of them. Learn to prioritize the debts. Sometimes, it helps to pay the smaller debts first to increase your credit rating and score and to relief yourself a little. It might help to maintain a spreadsheet file where you can regularly update the activities and the balances. This way you will know which and when to pay the debts. Try putting a separate sheet for your bank balances so you can track which can be your source when paying the funds. Secure the file with a password and avoid placing sensitive data on it.