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The Ever-changing Balance Trasnfer Credit Card

Due to the current economic climate, wise consumers are looking for every opportunity to save or earn money. As consumer spending continues to remain low, savings rates are increasing, and many Americans are working diligently to reduce their overall credit card debt. While the concept of balance transfer credit cards is not a new one, these cards are seeing a revival as a tool for rapidly reducing debt and saving significant money in the process.

A few years ago, the process of “stoozing” became a popular way for well-disciplined consumers to earn money from the credit card companies by taking advantage of 0% interest on balances and on transfers. The balance of the card could be drawn as a check and deposited to a high-yield savings account until the end of the introductory rate, then withdrawn and used to repay the balance in full. The interest paid on the savings was profit.

However, the credit card companies have generally stopped this practice by charging a transfer fee of up to 3% of the transferred balance. This particular avenue is not as worthwhile anymore, but there are other ways to benefit.

Stop Spending on Existing Accounts

In many cases, balance transfer cards will also provide an introductory 0% interest rate as well. If you qualify for this offer, one good option is to simply freeze the cards with higher balances and move ongoing expenses to the new card. This allows you to accelerate the repayment on the old card by eliminating interest charges on a balance carried forward with the new card. The cardholder also avoids any transfer fees with this option. For people with very high levels of debt, or with existing cards at a high interest rate, this may not be the best option.

Transfer Your Balance Intelligently

It is not always a good idea to transfer a balance to a new card. If the amount of the transfer fees and percentages is less than the amount you will save in interest, there is no reason to execute the transfer. Alternatively, for consumers with larger debt loads or with existing cards at higher rates of interest, the savings will likely outweigh the fees associated with the transfer.

Be Informed

As with any other financial product, read the fine print. Most introductory offers have very specific expiration periods, and these can be as short as six months. Once the introductory offer expires, the interest rate will revert to normal levels. This level, of course, depends on the credit history of the cardholder. Review carefully to ensure that either all debt will be paid off before the end of the period, or that the standard interest rate is still better than that on existing accounts.

Be aware that any late or missed payments can immediately end the introductory offers on most balance transfer credit cards. This means going from 0% APR on a balance to an immediate 19% or more if there are any mishaps. An issue of this type can completely eliminate any savings you might have realized. Apply for the best balance transfer credit card below or see also Balance Transfer Credit Card for more info.