The Two Advantages Balance Transfer Cards Can Offer A Consumer
By Todd Holliday
A 0% balance transfer credit card can make your financial life a whole bunch easier with a few strokes o the keyboard. You can save a minimum of $15 per month on interest for every $1000 that you transfer over from a credit card with an 18% interest rate. That's a whole $180 a year. Transfer a $10,000 balance and you will save a whopping $1800 a year. That is enough for a new wardrobe for many people. Your savings would be even higher if you were to transfer your balance from a card with a 24% interest rate. The purpose of this article is to further examine the benefits of a balance transfer credit card.
The best overall benefit provided by these cards is the actual interest savings alone. As stated above, interest can run in thousands of dollars every year depending on the amount of money that you owe. The average US household has in excess of $10,000 of credit card debt. If the average interest rate that everyone was paying equaled 16% than the average household spends at least $1600 a year in interest alone. That kind of money can be better suited towards all sorts of purchases. A 0% balance transfer credit card gives the consumer the ability to move their balance from a high interest rate credit card over to a 0% offer. These days there is also a balance transfer fee that is associated with transfers. You can expect to pay about 3% in fees to your provider. A $10,000 balance would have a $300 balance transfer fee applied to it. Even after you deduct the fees you are still in a position to save money.
The second biggest advantage is that they do have the ability to help you reduce your debt. Those who have good credit and would like to get out of credit card debt should look towards a 0% credit card for help. Most, if not all, balance transfer cards only offer a zero percent interest rate for a specified amount of time. Prior to the credit crunch of 2008 balance transfer were being given away every day. However, today, it is not uncommon to find offers that range anywhere from 6, 12, 18, 24 or even the odd 9 months. This gives you ample time to pay off a balance from another card. Before you apply for a 0% transfer credit card make sure that you have budgeted enough money on a monthly basis to cover. For example, if you have a $5000 balance and transfer it over to a 18 month intro offer make sure that you will be able to pay at least 278 per month for 18 months. Such a plan will ensure that you pay you pay your offer in full without being charged any interest.
The biggest disadvantage to a balance transfer offer is that they will charge you accrued interest on any left over balance at the end of the trial period. For example, lets say you have a $4000 left over balance on your 0% trial offer at the end of 18 months. What happens is that you will immediately be charged for 18 months worth of interest at what ever the regular APR. A $4000 balance can immediately get hit with $1080 worth of interest charges due at a regular APR of 18%. Those who do not pay there balance during the trial offer will be hit with a large interest amount immediately once the trial offer is over. Therefore, it is of utmost importance that you pay your offer in full before the trial period is over and avoid any accrued interest charges.
These cards can save an individual of family a huge amount of money. The average American household these days carries approximately $10,000 in credit card debt. That means that most people are paying about $1500 a year in interest charges alone. Those who utilize them properly will be rewarded with an almost free ride. Be aware that these days there are balance transfer fees that are applied. A balance transfer offer can also help any individual or family out of credit card debt.
Todd Holliday is an avid writer who enjoys subjects such as apply for a MasterCard and MasterCard credit card offers.
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