If your credit card debt seems to be getting worse all of the time then the last thing you may think of doing is to apply for yet another credit card. It may seem like a risky proposal but there is one time when it can be wise and can help to reduce your debt load and save you money. If you are able to make a credit card balance transfer that will reduce the amount of interest you pay then it is a smart move.
What is a balance transfer credit card? Many companies offer their customers the opportunity to transfer their balance from a credit card they presently have to a new credit card. Some companies will do this for no fee at all while others will charge a low fee. Transferring your balance to a card with a lower interest rate can be a means of paying the card off sooner.
Credit cards are no small business by any means. In fact most companies make a ton of money off of the finance charges alone. The average annual percentage rate (APR) for the majority of credit cards on the market today are 16 percent (or in some cases, higher). When you are paying that high an interest rate it makes it difficult to pay down, and pay off, a credit card. You are constantly being charged interest. The higher your balance is the more likely it is that you are paying mainly interest every month and not coming close to touching the principle. This can be distressing for anyone to think about.
What is a balance transfer credit card and how can it help you as a consumer? To encourage new business many credit card providers offer free balance transfers from an old credit card to a new one. Once the money has been transferred safely and effectively the new company is likely to offer you a grace period. During this grace period the interest you pay will be considerably less than what you were paying with your former credit card.
If you look carefully it is very possible for you to find a balance transfer credit card that will offer you one, two or even zero percent interest for the duration of the grace period. The average period of time for this introductory rate to last is six months to a year. However some companies only offer it for the first three months from the time the balance is transferred. Find out everything you need to about a balance transfer before you decide to go ahead and do it. While it can save you money there are also instances when it can end up costing you more.
Related posts: