The in’s and out’s of Credit Card Balance Transfers

                                                                                         

The in’s and out’s of Credit Card Balance Transfers

The holiday season is approaching and you are neck deep in debt. Gift yourself the best ever Christmas gift, that of a debt free New Year. Make use of the attractive credit card balance transfer plans card issuers offer this season. Wondering what credit card balance transfer is all about? Let me explain the Who, What, Where, Why and How of credit card balance transfer.

Who can go in for a balance transfer?

Anybody with one or more credit card debts can go in for a balance transfer of cards. Typically those paying high interest rates on their credit card debts can apply for a balance transfer. You will be asked for your social security number and the balance details of the old card you would like to transfer.

What exactly does a balance transfer mean?

Let us assume you have a card 'A' with a debt of $1,500 and another card 'B' with a debt of $500 and are paying 18% interest on each of them. A new card issuer 'C' offers a new card with an interest rate of 6%. With a balance transfer, 'C' will pay off the balances on ‘A’ and ‘B’. In turn, you have to pay back ‘C’ the transfer amount debt of $2,000 ($1500+500) at a rate of 6%.

When should you not use your balance transfer card?

If you are getting a new card because there is an attractive balance transfer scheme, then use it just for that. Such cards may usually have high rates for purchases or cash withdrawal. Even if you make the payment for the purchases made, the card company usually diverts the payment towards the lower interest debt first, which in this case would be the transferred debt.

Where will I get good deals?

This is when you have to pay attention to all those irritating spam messages in your inbox, pesky marketing calls and the free pamphlets distributed in the malls. You may actually land with a good deal.

How to find a good balance transfer offer?

Most card issuers have special offers and discounts for balance transfers. When you apply for a new card you’ll be asked if you’re interested in a balance transfer. You can find a comprehensive list of offers tailor made for your situation at sites like Billshrink.

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