There are times that other credit card providers offer low interest rate compared to your current provider. Most providers can even offer you a balance transfer plan. These promos target those who already have credit cards. They may offer zero interest on transferred balance or they can offer very low rates.
You can also choose to transfer the balances of your current card to the new provider. Today, this can be done easier and faster using the internet and instant applications. However, before you make such move, there are things that you should understand about balance transfer to help you weigh things:
- Your credit rating may be affected once the report shows that you carry many cards. This is indicative that you carry many debts unless the company reports that you have paid them off.
- It is possible that your attempt to transfer all your balances will not be approved by the new company. They may just take a portion of the balances that will leave you with two debts to pay.
- Despite the zero or low interest transfer plan, you might find yourself paying other hidden fees and charges. It then important that you read the agreement or terms from the new company about their plan before you finally decides to transfer your balances to them.
- The period of low interest for transfers may be too short before you can actually pay off all the balances. In which case, you may end up paying higher interest than your current provider if the interest will revert back to its normal rate. Again, reading the provisions is important before you accept that seemingly attractive offer.
It pays to shop around for the most favourable plan for credit card transfer. It cannot be overemphasized to always read the fine print for more details about the offer. This will help you get the real picture of what is being offered.
To maximize the privilege of the new reduced interest rate from your transfer, you must pay all balances. Because of the low interest, most of your payment will actually go to the principal amount and will help you save substantially. Do not wait for the period to end before you finally pay off the balances. Moreover, it would help if you do not close the previous card even if you have no plans to use it further. Unused card with zero balance will actually help improve your credit score.