How to Properly Take Advantage of Credit Card Balance Transfers

When your credit card debt goes way out of hand, know that you can always count on credit card balance transfers. Basically, what this card does is it amasses your entire credit card bills and piles them in one single credit card account. With it you’ll have lower interest rate and will be paying for one bill per month. But you already know that.

What you may fail to realise though is that using balance transfers can be risky. Instead of getting help, you may get stuck deeper in debt. Here are some tips on what you should know and do:

Comparison

Compare credit cards first. There are balance transfers that have lesser interest rates and there are those which have exorbitant ones. Some may have annual fees, some may have none. The lowest interest rate doesn’t necessarily mean the best credit card. Some come with unnecessary surcharges and other penalty terms. Your best bet is a median interest rate but has no surprise fees.

Strictly for Balance Transfer Only

Refrain from purchasing using your balance transfer credit card. Know that this is detrimental to your finances. Balance transfer credit cards charge steep interest rates on purchases. So don’t mistake its 0% interest rate. It’s only offered for balance transfer and ‘not’ on purchases.

Be Smart This Time

Should you need to purchase, stick with your old credit card with a warning. Be sure you can afford to repay it this time. Or else, you’ll be back in that same old cycle where in you can’t get a reign of your credit card debt. If you find yourself contemplating another balance transfer, then you’ve never learned.

Expiration

Know that the low or 0% interest rate has expiration. Usually, it only goes on for months up to a year. Be sure to mark the expiry date. Before that time nears, you should’ve paid the rest of your debt completely. If after expiry and you still have balance left, the interest rate for that could be immensely steep.

Pay Higher to Get Out of Debt Faster

Now that you’re on a balance transfer, your minimum payment becomes lower than your previous minimums. But don’t be complacent. Take this chance to diligently pay above the minimum and within the low rate period. Keep at it and you’ll be credit card debt-free in months.

Balance transfers can be tricky but with these tips, you’ll surely handle it just fine. Remember, your purpose for balance transfer is to get out of debt. Not to have a temporary breathing space so you can charge mindlessly again.