In one of my previous articles titled Transforming Extra Calories into Extra Money on Your Credit Card I apparently paid no due attention to a traditional and perhaps the most effective method of clearing your credit card debt â€“ using a balance transfer credit card. Customers who manage their credit with balance transfer services are called rate tarts and their main object is to find a low interest credit card to move the outstanding balance on.
Irrespective of the credit score, a customer is eligible for a balance transfer plastic, but mind a certain unfailing regularity – the lower your rating, the more expensive the deal will be for you.However, a balance transfer credit card is always a good tool for you to reduce or even do away the annoying debt as it usually offers a more acceptable interest rate than that on your current plastic.
Let me remind you of some key points involved in doing the balance transfer, that guarantee you a successful cure for the racked up debt. A smart rate tart should by all means know the difference between an Intro rate on balance transfers (usually 0%) and a low ongoing APR on balance transfers that remains valid until you are through. If you mean to repay your debt at one fell swoop and admit paying no interest on it, then a 0% Intro APR card with balance transfers will be your way to go.
However, in practice, not many cardholders can afford the funds necessary to eliminate debt in a year or even half a year. This category of debtors should try luck with a low ongoing APR on balance transfers which is usually about 5% until you repay in full. If you have drawn nothing really new to you yet, then it is almost a must to go on reading!A rate tart differs from a regular debtor, who industriously, slowly but surely pays back the debt to a bank, in his/her bent to keep debt at a steady 0% by constantly moving it from one card to another.Until recently it was quite ok and credit companies readily and warmly welcomed new customers.
Surprisingly, it appeared that rate tarts do not generate much revenue to creditors because they close the line as soon as the 0% intro period is over. The natural response of the card providers is the transfer fee cap increase.Being previously 2% to 3% (which is, however, still valid with a number of issuers), the transfer fee may hike to as much as $75, spoiling the customer’s interest in the deal.
Eliminating the caps on balance transfer fees is equally bad news for both, good and bad credit customers, but it is expected to bring additional profit to banks.If you have been planning to kill the debt long bothering you, it’s time to decide which way to go – a balance transfer, fast and effective but now costly, or reducing your spending and improving payment habits