Take control of your debt with a balance transfer credit card offer
Credit card debts seem to overwhelm a good number of Americans, and most of them can hardly keep up with the monthly payments. As a result, there are so many who are still in debt and cannot seem to settle the credit card balance.
As a matter of fact, for some card holder, the balance seems to be growing by the day. The average credit card interest rate is 18% and as such, paying off the debt is a daunting task. One of the best solutions would be transferring the huge debt to a new credit card that has a low preliminary interest rate. This would help you pay off your credit card debt faster.
If you are still new to this idea, this guide will give you all the ins and outs of the balance transfer credit cards. You will get the right knowledge that will help you make an informed decision on whether to transfer your credit card balance or not.
What is a balance transfer?
If you have an existing credit card debt that seems to be stagnant, you may consider the balance transfer credit card. This card has a low introductory APR, which can be as low as 0% . When you transfer your credit card debt to the new card, you will make huge savings on the interest of the debt being transferred. You should note that this is an introductory offer for the new users and it means the lower interest rate is not permanent. Most credit card holders, with a high APR, do not realize that most of the payments that they make go towards interest and not the principle. When you get a low interest on the balance transfer card, you will have a chance to catch up on the principle balance, during the introductory offer.
How do balance transfers work?
The balance transfer credit card works in the same manner as the conventional credit cards. However, the main difference is the fact that it allows you to move a credit card debt with a high-interest rate to a new card. Ideally, the new credit card offers lifetime opportunity to offset the debts from your previous cards. One of the key requirements when applying for a balance transfer credit card is to provide a list of creditors and the amounts that you would want to pay off. You will also be required to provide your physical and financial information. If the credit new credit card application is approved, the amount of debt that will be repaid off will be determined by the card limit. The new credit card limit is mostly influenced by your credit history.
With the new credit card, the credit company will settle the balances of the creditors listed on your application. In the event the credit card limit on the new card is not enough to pay off all the creditors, they will be paid in order of the list and stop at the point when the credit card is maxed out. This is will be after the applicable fees have been deducted. You can also choose to transfer the credit card debt after the application has been approved. You can make the transfer requests through the internet.
There is a fee that is charged on the balance transfer credit card. In most cases, the average fee will be 3-5% of the total amount that is transferred to the new credit card. For instance, the new balance transfer credit card is approved with a limit of $5,000 and the transfer fee is 5% , you cannot have the full amount transferred. The fee of $250 will be deducted, and this means you can only get $4,750 as the amount transferred.
What exactly can I do with my balance transfer credit card?
The main purpose of the balance transfer credit card is to merge all your debts. However, there is a whole lot more that you can do. You have the discretion to transfer any amount that you choose to the new card, as long as it is within the credit limit. There are people who opt to transfer their debt to different balance transfer credit cards when the APR introductory promotion ends.
The balance transfer cheque is one of the key incentives that most credit card companies use to acquire new card holders. The blankcheque allows you to draw a check in favor of the other creditors, put money into a checking account or draw a cheque in your name. The amount that you will write on the cheque is restricted to the new credit card limit. In the event that you get the blank cheque in your mail, please note that this is a provider’s offer and you are expected to pay back the amount within the stipulated terms.