Balance transfer credit cards are a tool that can be very efficient if you’re careful with them. When people get into credit card debt they tend to look for any way to help them get out of it. Unfortunately, the downside is that with a poor economy, balance transfer credit cards are harder to get a hold of than they used to be. This is especially true if your credit is poor. However, if you qualify, assess the true cost and savings up front, and manage them wisely, balance transfer credit cards can open up a window of opportunity to help you maintain or rebuild your credit.
A balance transfer credit card is a credit card with an extremely low (usually 0%) interest rate with a very long grace period for repaying your debt. After that grace period, though, they can become very costly, often more than a typical credit card. They can be used very effectively in assisting people in credit card debt to get out of it before their credit scores are irrevocably damaged. These cards do carry some fees to use, but they are much more lenient than typical credit cards. As mentioned above, it’s much harder to snag a balance transfer card in a poor economy; much like it’s harder to get a loan in a poor economy.
Double Edged Assistance
Balance transfer cards are powerful tools if used appropriately. It’s not a good idea to use them as you would a normal card, simply because they are not meant to be used like that. When used as a normal card the company will apply your payments to recent purchases, then balance transfer fees, then your transferred balance. They are meant to be used as tools to help you have lower interest rates on debts you already owe, usually another credit card. Knowing when and how to properly use a balance transfer card is the key to eliminating your debt. There are fees for every transaction done with one of these cards, and it differs per company. You are in essence paying your old balance with a new credit card with a low interest.
There are many services that offer balance transfer cards, and they all have their pros and cons. These cards tend to be extremely common when the economy is good, but wane when a poor economy is present. Companies have actually closed down because of a poor economy that’s unable to support their balance transfer cards because these cards are expensive to maintain. It’s prudent to keep an eye on the provider of your balance transfer card when you apply, that way you don’t end up having the ground fall out from under you should that company or service be terminated.
Balance Transfer Credit Cards And Your Credit Score
People that can’t pay back their debts quickly and efficiently sometimes end up hurting themselves after they apply for a balance transfer credit card because the rates go up so high past the low interest grace period. Balance transfer cards carry fees for some transactions to offset the lack of interest, these fees can get high, and you should keep your eye on these.
You still pay monthly on your balance whether or not you buy anything new with your balance transfer card. That is an important thing to remember, because some may grow too complacent with the low interest and slack on paying their bill. It may be a good idea once you’ve eliminated your card debt to get rid of at least some of your cards, provided it won’t actually hurt your credit score, that way you don’t end up in the same situation later.
Applying for any credit card can affect your credit score. Balance transfer cards are no different, and may actually affect your score more than other cards. If you’re going to be trying to get a loan for a major project such as getting a home or starting a business, applying for a balance transfer card may not be a good idea within a year of your intended date of application.
Alternatives
Even should you not be accepted for a balance transfer card, or simply don’t want to try to balance two cards or debts with such high stakes, you can use other methods of the same general idea. For example, you can use a low-interest credit card in a similar fashion to pay off a card that might have gotten an elevated interest rate due to economy fluctuations. Bear in mind that this can affect your credit score if you don’t pay your dues expediently, like any other fashion of credit card usage.
Before deciding on either option, do the math. There are numerous credit card calculators available online to help you figure out how much money you will save, or spend, in the long run. Be sure to include any transfer fees in your calculations.
Compare Balance Transfer Credit Cards Available Now!
Balance transfer credit cards are a powerful tool to get you out of credit card debt, when used appropriately. When used poorly, they can and will hurt you, so should you decide to look into them and make sure you weigh your options and needs, as well as your personal habits and tendencies.Use our free credit card chaser above to compare credit cards for balance transfers right now!
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