Zero percent balance transfer credit card offers have become a common promotion method of credit card companies for acquiring new customers. The fact is credit card companies are all competing for your business and they are now offering balance transfers in many ways, which are becoming more and more appealing.
Every credit card company is working hard to invent new ways of attracting applicants to apply for a credit card with their company. Now it is possible to transfer a balance from your current credit card to a lower interest rate one. If you are struggling with credit card debt, a low or 0% interest balance transfer credit card can help consolidate that debt.
Before considering zero percent balance transfer credit card offers however, there are a few essential items that you should know about balance transfers so you can be sure that transferring credit card balance to a new credit card is a good decision. Plus, you can also get other tips on utilizing a 0% balance transfer credit card to its fullest advantage.
Evaluating Zero Percent Balance Transfer Offers
The main purpose behind transferring balances from a card with a higher interest rate to one with a lower interest rate is to save money by reducing or even eliminating finance charges. When looking for the best balance transfer credit cards, it is important to look at the following factors:
1. Length of the low or zero APR. The length of the special introductory APR varies from card to card — dependent upon applicant’s credit history. Find out how long this period lasts and how long it is going to take you to pay the balance down. Ideally the special offer remains in place until you pay off the entire amount you have transferred.
2. Zero percent or fixed APR? Fixed APR balance transfer credit cards give consumers with a better way to pay down credit card debt than 0% interest ones. This is especially true for those considering using a second mortgage. In addition to the savings you can get from refinancing fees it also doesn’t remove equity from your home.
3. Balance transfer fees. Some of the balance transfer credit card offers do not charge a fee to transfer but others include a transfer fee, either a minimum of $50 up to 4% of the total amount of funds transferred. You need to take these fees into consideration when computing your savings.
4. What the teaser rate applies to. Does the 0% offers only apply towards any amount you transfer over from other cards or does it also apply to new purchases? If it only applies to the balance transfer amount you’ll be paying a normal interest rate when you use the card for any purchases. For any situation be sure to only use that card for balance transfer.
5. APR after the teaser rate expires. Another thing you need to consider is the interest rate after the introductory period is over. This number is essential if, for any reason, you want to continue using the zero percent balance transfer credit card.
The best strategy for you would be having the full balance paid off by the end of the introductory period. But if that is not possible, at least you still have a good part of that balance paid down. Also, by the time the 0% introductory period is over but the rate is still lower than your present card you could still save some money.
0% Balance Transfer Credit Card for Debt Consolidation
Once you have transferred your balance to the new credit card, be sure to pay on time and to keep that card for transferring balance. Make sure you keep up with the terms of the card. If you use it to make any purchases you’ll be accruing interest on the purchases and have no way to repay them unless you pay off the balance transfer first.
Another thing to avoid is applying for another zero percent balance transfer credit card. Remember that each credit inquiry affects your credit score. Try to keep switching credit cards to a minimum because as a chain user of balance transfer credit cards, you run the risk of negatively affecting your credit score in the long-run.
Making only the minimum payment on your balance transfer credit card is a bad idea. It can still take you years to pay off the debt — and that assumes you are not adding any more debt to your balance. If you really want to get out of debt, it is best to set up a budget that allows for regular payments above your minimum payment and stick to it.
Those are the tips on how to check balance transfer offers and how to use a zero percent balance transfer credit card. The best balance transfer credit card can save you money in finance charges but it cannot do all the work for you. To get out of debt you have to create a little extra cash flow and add the savings toward your credit card debt.