Transferring your balance of debt from one credit card to another can offer some benefits. Most obviously, you can enjoy a lower interest rate. That is the reason most people move their balance around. They feel they are paying too much for their interest on their current card, and they want to see if they can get a card with a lower interest rate.
In order to make this work in your favor, you first have to find the best deals on credit cards which offer a balance transfer. Beyond the interest rate, you should also look at charges for going over your limit, for making a late payment and for other occurrences which may cause you to be charged an extra fee. Sometimes the lower interest rate may not make up for the additional charges.
You also need to be aware of the transfer limit placed on the card. While many credit cards allow you to transfer balances between cards, there may be a limit in place. Be sure that your new card’s limit is not less than what you need to transfer.
Once you transfer a balance from one card to another, you do need to be careful about making any purchases with either card. Obviously, you wouldn’t want to make purchase with your old card because the interest rate is so high, but your new card may have higher than normal interest rate for purchases. That’s because the card company may charge you at the standard card APR for any purchases you make, so try to avoid using the card at all, if you can help it.
Also keep in mind that while the new card may have a lower interest rate initially, that rate may go up after a while. This is the case with a lot of cards that offer low interest rates. They reel you in with promises of low rates, but those rates almost always increase, especially if they started out far below the market average. Be aware of that as you keep a balance on the card. You may want to pay off that balance as fast as you can to avoid the increased interest rate being applied to it.
When you make a credit card balance transfer, you will likely be charged a fee for the process by the credit card company. That’s an expense most people overlook, but you definitely need to be prepared for it. Before you request a balance transfer, as about any related charges so you know what is coming.
Once you have had your balance transferred over, you need to concentrate on getting it paid off as quickly as you can. Repeated transfers, changing up cards and other out of the ordinary credit and debt transactions can have a negative effect on your credit score. These actions can show that you have financial instability and that you have difficulty in paying your debts back on time. That’s why it is a good idea to focus on getting rid of your credit card balance as soon as you can.
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