Check the Fees
When you're looking for a balance transfer credit card, pay extra attention to the fees involved in the transferring process. Many will charge a certain amount for bringing the balance from a different card onto the new one. This amount is usually expressed in the form of a percentage rate. So if you are transferring $2,000 and the fee is 3 percent, you'll have to pay $60 for bringing the amount onto the new card.
In most cases, the balance transfer fee will be relatively small, and you will still save a great deal of money in the process. This is because balance transfer credit cards grant you a certain amount of time during which there is no interest charged to the balance. This gives you a chance to pay off the amount you owe without having to worry about extra charges.
Back Away from Purchases
Having a new credit card may make it tempting to start buying new things. With a balance transfer one, however, you'll want to avoid shopping with it. This is because while you will usually get a very low rate, or even a zero percent interest rate, on the balance, you will be charged a higher rate for the new purchases. So stay away from the mall, and focus on paying off that debt.
Pay it off during the Introductory Period
This is one of the best ways to benefit from a balance transfer credit card. Find out how long the 0% APR period lasts, which is the amount of time that no interest will be charged to your transferred balance. Then take the amount you owe and divide it by that timeframe. Say you have a $6,000 balance that you bring over to the card, and you have 12 months of zero percent interest. By paying $500 each month for a year, you'll wipe out the debt. During that time, you will also save hundreds of dollars in interest.
Learn from the Past
If you need to transfer a balance, there's probably an underlying reason that explains why you need to do so. You may have fallen into debt problems, or perhaps you had an emergency come up and needed to dip into your credit cards. Whatever the reason, it's important to evaluate how you got where you did. Then form a plan to help avoid falling into debt problems in the future. You may want to build up your savings, or focus on paying off the balance on your cards every month.
Balance transfer credit cards can be a great way to get rid of debt. But they can work against you if you don't use them to your advantage. So pay attention to the details, set up a plan, and work to pay off that balance. You'll be out of debt and into a better credit future in no time.
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Article Added on Friday, March 6, 2009
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