Credit Card Balance Transfers 101
What is a credit card balance transfer, and why is it important?
We should all know by now that higher interest rates translate into higher payments and more money paid over the long term. But many people don’t know that you can actually transfer the balance from a higher interest card to a lower interest card in order to save money.
A balance transfer simply means that you are taking the full or partial balance of one card and moving it to another card. This is usually done because the second card has a much better interest rate, but there are other reasons consumers may wish to transfer their credit card balances. They may wish to take advantage of special balance transfer offers, for example. And some people transfer a balance to another card so that they can shut down the first card because of poor service, mistakes made by the lender, or other reasons. Another common reason to do a balance transfer is to lower your utilization. Your credit score is based partially on how much of your credit you are using. By transferring part of the debt from one credit card to another, you lower the utilization on the first card, which may increase your score.
If you are considering a balance transfer, one thing to keep in mind is the fact that a lower interest rate does not automatically make one card better than another. You should also take into consideration factors such as annual fees, other charges, and customer service issues. If the first card has much better customer service, it might be better to stick with them. You never realize just how important excellent customer service is until you have a major problem.
Now and then you may find yourself receiving applications in the mail for credit cards with balance transfer offers. They may seem incredible, but you should always read the fine print to be sure. Some of them have hidden fees, and some of them may offer a very low interest rate on balance transfers, but then have a very high rate for new purchases. Just make sure you know what you’re getting before you agree to any balance transfers.
As with anything, a little research can save you a lot of time and frustration down the road. Only through diligent research can you be certain that you are truly getting a good deal out of your balance transfers.
Jake Riley operates an internet Marketing review center available at http://www.GurusLab.com . The site was designed to offer uncensored reviews of all the latest product launches, WSO’s, marketing services and products from new marketers and seasoned pros.