How Can Balance Transfer Credit Cards Save Me Money

Category: Finance, Credit.

When it comes to using balance transfer credit cards, many consumers are filled with questions and concerns. How Can Balance Transfer Credit Cards Save Me Money?

While there are many benefits to using a balance transfer credit card, it is always best to have these questions answered and the concerns satisfied before moving forward with applying for one of these cards. Balance transfer credit cards can save you money by reducing the amount of finance charges you pay every year. For example, if you have a credit card with a 20% APR, you will pay$ 200 per year to maintain that$ 1, 000 balance. If you transfer even a small amount of money, such a$ 1, 000, from a card with a higher APR to one with a lower APR, you will see a difference. On the other hand, you will pay only$ 80 on that same balance if you have a credit card with an 8% APR. Imagine how much you will save on larger balances.

That is a savings of$ 120! Even better, the best balance transfer credit cards offer 00% introductory APRs, which means you will pay no finance charges while that introductory period is active. What is an" Introductory Rate? " An introductory rate is a special APR that lasts for a limited time. With some balance transfer credit cards, this special rate remains in place until the entire amount you transferred is paid off. Often, the length of time this rate is in place is determined by your credit history. What is a" Fixed Rate? " A fixed rate is a rate that does not change. The introductory rate can be in place for as long as one year, though more common durations are six months, and one month, three months.

Balance transfer credit cards with a low fixed rate may not offer a 00% introductory APR, but they might offer a 99% APR that remains this low no matter how long it takes you to pay off your balance, rather than skyrocketing up to 199% after the introductory period is over. Many people feel balance transfer credit cards are more convenient because it places all of your debt in one place. Why Does Everyone Say Balance Transfer Credit Cards are More Convenient? This makes it easier to track your expenses, to create a budget, and to get your bills paid on time. From a legal standpoint, all you are required to pay on your balance transfer credit card is the minimum payment. Is it OK to Pay Only the Minimum Payment on My Balance Transfer Credit Card? From a financial standpoint, this is a, however bad habit to get into.

So, if you want to get out of debt( and who doesn t? ), it is best to pay off more than your minimum payment. If you pay only the minimum payment, it can take you decades to pay off your debt- and that assumes you are not adding any more debt to your balance. Set up a budget that allows for regular payments above your minimum payment to be sent to the credit card company- and stick to it. Yes and no. Will a Balance Transfer Credit Card Get Me Out of Debt? If used alone, a balance transfer credit card will not get you out of debt.

Therefore, a balance transfer credit card should be viewed as one tool in you tool belt for helping you work your way out of debt. If you transfer all of your credit card balances to your balance transfer credit card and pay only the minimum payment, it can still take you years to pay off the debt. If used correctly and to its fullest advantage, it can help you get out- and stay out- of debt.