Best balance transfer credit cards
A balance transfer credit card can be a powerful tool for somebody looking to pay down their credit card debts quickly and with minimal interest and fees. But for those who don’t read the fine print nor ask the right questions, what could have been a prudent financial decision can soon end up costing a lot of money. Here you will find some of the most important things to look for in a balance transfer credit card to make sure it is saving you money and making your life easier.
By far, the greatest attraction that many people have to a balance transfer credit card is the low interest rate. There are a few inquiries you need to make as regards this impressively low rate before you apply for an account immediately, though. First, find out whether the low interest rate is a promotion or if that is their standard rate. Most of the time this interest rate will be a promotional rate, which in itself will lead to you having to make further inquiries.
For example, how long does the promotional rate last for? If it’s for a very short period, after which you’ll be paying an interest rate even higher than is on your current credit card, then it hardly seems worth transferring your balance. If, however, the promotional period is long enough for you to pay all or most of your transferred balance, then those low interest rates can translate into huge savings. Be sure you qualify for the promotional rate, however; otherwise you could end up not only getting refused the low interest rate, but even end up paying an exorbitantly higher rate than you are already paying.
Furthermore, you will need to find out how far that promotional interest rate extends. If you’re looking to consolidate multiple credit card debts into your new balance transfer credit card account, then you’ll want to know whether the low interest rate applies to all your transferred balances or only to the initial one. Otherwise you could be paying quite a high interest rate on any balance above the initial transferred balance. Also, are you planning on using this account to make new purchases? If so, it is quite common for the low interest rate to not apply to these additional purchases, which again can mean paying even more money in the long term.
After the conditions of the promotional interest rate are understood, you will need to inquire about any fees you will have to pay for your new transfer balance credit card account. These most often come in the form of balance transfer fees, which are typically calculated as a percentage of the balance you are transferring to your new account. While balance transfer fees are not necessarily a deal breaker if you’re looking to save money, you will need to compare these fees with what you are currently paying in interest on your credit card balance. If the fees are higher than your current interest rate than you may be better off looking for a better deal elsewhere or just sticking with the credit account you already have.
Thus, by asking the right questions you can prevent yourself from falling into a potentially bad situation whereby you are paying even higher interest rates and fees than you expected. Armed with the above information, you can be sure that you’ll be getting a better deal out of any transfer balance account you choose to open and find the best balance transfer credit cards for you.