On the surface, 0% balance transfer credit cards are amazingly enticing, in case you have outstanding credit card balances. But there's a few details you need to understand before taking the balance transfer credit card plunge.
Some consumers appear to get in trouble overnight with credit cards. Seemingly broke and deeply in debt, some desperate card holders are constantly looking out for a fast fix for the credit issues. A 0% credit card balance transfer might appear to be the ideal solution. Lots of among us desperately jump at such offers without much forethought. 0% deals on balance transfers or purchases might appear irresistible even to the most credit worthy person. But in case you have a immense outstanding card balance (or balances), a 0% credit card balance transfer will appear profitable. And to no surprise, there is no shortage of these type of balance transfer offers currently available in the marketplace.
Irrespective of your credit circumstances, you ought to exercise caution and thoroughly inquire in to all aspects of any credit card offer that you think about. Despite the obvious attractions of a balance transfer credit card, it is worth giving a second thought before you cut up your elderly credit card to make room in your wallet for the new one. Companies often fail to clarify the fine print, hiding those disagreeable details which could cost you dearly in the long run.
Let us start with a very typical credit scenario. Imagine having a $10,000 outstanding balance on a credit card with a 10% annual APR, translating to $1000 in finance charges on a yearly basis. On the other hand, imagine securing a credit card that offers you 0% on balance transfers for the first year of membership. Transferring your card balance to a 0% balance transfer offer would cut down your annual interest expense by $1000. Thrilling, is not it?
But did you bother to check what the rate of interest would be after the introductory interest-free period? The rate might turn out to be significantly higher than your existing card, and you do not need to be caught on the wrong side of a high APR. Forewarned is forearmed. You will need to plan ahead - and not a day or five before the interest-free period comes to an finish. Some consumers might be surprised to discover that when an introductory APR offer expires that the rate of interest can revert retroactively to an APR of 23% and beyond. In case you do not pay off your balance systematically and finish up with a immense balance when the introductory offer expires, lots of times consumers are stuck paying out an outrageously high APR because they did not pay down their card balance at all. So above all, make sure to plan on paying off that balance before the introductory period expires or you may regret it.
0% Balance Transfer - Some Pointers
When thinking about balance transfers credit cards, help yourself by asking these questions:
- What will be the rate of interest one time the preliminary introductory 0% balance transfer period is
over?
- Is it comparable to my current APR or will it be significantly higher? What is the net difference?
- in case you plan to over a card balance over time, what will be the long-term net effect of the difference in APR's?
- Do I need to get in to the habit of switching from one 0% balance transfer card to another?
If your current credit card offers a better long-term ongoing APR than the new one, it makes more sense to stick with what you have got, in case you have the means to pay off your card balance without incurring giant finance charges. A balance transfer card most definitely has its own pros and cons but in case you need to make use of balance transfers to your advantage, make sure that you understand the net benefits of the card over the long term.
Some consumers appear to get in trouble overnight with credit cards. Seemingly broke and deeply in debt, some desperate card holders are constantly looking out for a fast fix for the credit issues. A 0% credit card balance transfer might appear to be the ideal solution. Lots of among us desperately jump at such offers without much forethought. 0% deals on balance transfers or purchases might appear irresistible even to the most credit worthy person. But in case you have a immense outstanding card balance (or balances), a 0% credit card balance transfer will appear profitable. And to no surprise, there is no shortage of these type of balance transfer offers currently available in the marketplace.
Irrespective of your credit circumstances, you ought to exercise caution and thoroughly inquire in to all aspects of any credit card offer that you think about. Despite the obvious attractions of a balance transfer credit card, it is worth giving a second thought before you cut up your elderly credit card to make room in your wallet for the new one. Companies often fail to clarify the fine print, hiding those disagreeable details which could cost you dearly in the long run.
Let us start with a very typical credit scenario. Imagine having a $10,000 outstanding balance on a credit card with a 10% annual APR, translating to $1000 in finance charges on a yearly basis. On the other hand, imagine securing a credit card that offers you 0% on balance transfers for the first year of membership. Transferring your card balance to a 0% balance transfer offer would cut down your annual interest expense by $1000. Thrilling, is not it?
But did you bother to check what the rate of interest would be after the introductory interest-free period? The rate might turn out to be significantly higher than your existing card, and you do not need to be caught on the wrong side of a high APR. Forewarned is forearmed. You will need to plan ahead - and not a day or five before the interest-free period comes to an finish. Some consumers might be surprised to discover that when an introductory APR offer expires that the rate of interest can revert retroactively to an APR of 23% and beyond. In case you do not pay off your balance systematically and finish up with a immense balance when the introductory offer expires, lots of times consumers are stuck paying out an outrageously high APR because they did not pay down their card balance at all. So above all, make sure to plan on paying off that balance before the introductory period expires or you may regret it.
0% Balance Transfer - Some Pointers
When thinking about balance transfers credit cards, help yourself by asking these questions:
- What will be the rate of interest one time the preliminary introductory 0% balance transfer period is
over?
- Is it comparable to my current APR or will it be significantly higher? What is the net difference?
- in case you plan to over a card balance over time, what will be the long-term net effect of the difference in APR's?
- Do I need to get in to the habit of switching from one 0% balance transfer card to another?
If your current credit card offers a better long-term ongoing APR than the new one, it makes more sense to stick with what you have got, in case you have the means to pay off your card balance without incurring giant finance charges. A balance transfer card most definitely has its own pros and cons but in case you need to make use of balance transfers to your advantage, make sure that you understand the net benefits of the card over the long term.
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