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Balance Transfer Credit Cards

Dec 17th 2015 at 12:53 PM

Balance Transfer Credit Cards are cards that allow you to transfer all outstanding credit card balances and place them on one card. This type of card is typically used to lower interest rates, combine payments, or to acquire better rewards. Balance transfers means that the balance of one card is transferred to another card, usually owned by a separate company.

When a cardholder is issued a new card, companies typically include transfer offers in order to entice cardholders to use the new card. Companies may offer various perks to cardholders if they transfer to a new card, including an introductory no/low interest period and/or reward points for the transfer of balances. Once the transfer is finished the credit card company not only gains a new customer; they gain a card balance they can charge a high interest rate to once the introductory period is over.

Occasionally, a cardholder may be offered a permanent low interest rate for switching to the card, but those are rare. Typically, low/zero percent interest rates only last for the first six to eighteen months of using the card. There are two useful strategies to consider when talking about the promotional low/no interest period. The first is only to charge what you know can be paid off during that time to the card. This will allow you to quickly pay off a debt that has been weighing you down due to high interest rates. Another strategy is to consider the higher non – promotional interest rate and make sure that it is still lower than what you are currently paying before you transfer the funds. You do not want to end up paying even more money.

Fees vary depending on the company and offers, but typical balance transfer fees range from three to five percent of the balance being transferred. These offers are typically for those who have good or excellent credit scores. A lot of times when you apply for a new card the offer of a balance transfer will be made before you even know if your approved or before the decision has been made on a credit limit.

Closing an old credit card account can negatively impact your credit score. The age of credit and how long opened accounts have been maintained both affect your credit score. Both of these factors are influenced when transfers are made. Transferring a balance and using an old car to accumulate new debt can negatively impact your credit score if your debt and payments becomes higher than you can pay. It’s important to understand the numbers and plan before transferring balances from an old to new card. More detailed information about Balance Transfer Credit Cards can be found at; a site dedicated to empowering cardholders by providing them with essential information that could potentially save them thousands of dollars in debt.

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