Credit cards today offer balance transfers feature. If you use this feature wisely you will able to save a lot from interest payments. Here is your first lesson about balance transfers to make it work to your advantage.
Balance transfers mean withdrawing one credit balance from a card and placing it on another card. In effect, you are using the second card to pay off the debt incurred in the first card. So let’s say your first card has $1,000 balance, you can remove this and transfer it all to your second card with no balance.
This process is fast and easy especially when done online. You can request for transfers from your bank. Give them the necessary card details and how much you want to be transferred to another card. You can do this at any time you find convenient. Most online transfers work 24 hours a day.
Now here is the tricky part. These transactions usually come with a cost. It is rare to find no transfer fee except when a bank is currently having a promo. Some companies impose a fixed rate like 2% of the amount you want to transfer. You have to consider service fees such as this in computing for virtual savings should you decide to pull out your debts from one card and transfer it to another card.
With stiff competition nowadays in the credit card industry, some companies try to win clients by offering 0% on balance transfers. However, be sure that it is really 0%. Some cards offer 0% only on the amount you will transfer, but will charge you a fixed rate for the transaction itself. In some cases also, the 0% offer is only on a promotional period, like 6 to 12 months. So if ever you have debts incurring high interest rates in one card, you can take advantage of this promo from your second card and transfer your debts. You will save a lot if you can complete your payments within the promotional period.
The best way to take advantage of transferring balances feature is to consolidate all debts into just one card. Your cards probably have varying interest rates. What you want to do is to take advantage of any of your cards that currently has the lowest interest rates, especially if you will not be settling your dues in full. You will save a lot of money that could otherwise only be used up to pay for interest.
If you are having a hard time with your financial obligations now, better start comparing interest rates of your card and look into the possibility of transferring debts to one with the lowest or 0% interest.