Credit card interest rates are reaching new heights as people try to curb their growing debt in the face of the Global Financial Crisis. At this stage the average interest rate on most credit cards is around 16 per cent with diverse levels of interest linked to different kinds of transactions.
As an endeavour to appeal to competitors customers, the balance transfer credit card was created to provide an outlet for banks and other financial institutions to attract new credit card customer by offering the customers a better rate than their existing credit card.
Balance transfer credit cards have are attracting a high level of interest over recent years as credit card users try to avoid building debt on credit cards with high interest rates attached.
Balance transfer credit cards offer a fast way to reduce your debt primarily due to the ability that a person is able to consolidate numerous debts onto one account. Furthermore, the bulk of balance transfer
credit cards now available on the Australian market are now offering remarkably low introductory periods. That is, they are offering anywhere from 9.99 per cent interest rates to six months interest free, offering attractive alternatives for people with existing credit card debt.
The six month interest free offer allows credit card users to significantly cut down or even pay off their credit card debt in full, if they take full advantage of the introductory period.
Naturally, there are hidden issues with any manner of financial account or transaction, so you should look over the pros and cons of balance transfer credit cards and your own financial setting to verify whether or not they are right for you.
Why should you use a balance transfer credit card?
Balance transfer credit cards offer credit card users the terrific chance to easily consolidate their various debts into one straightforward repayment system, thereby cutting down several rates of interest and remembering various payments every month.
Naturally, the fundamental appeal of a balance transfer credit card is that the card holder is now able to pay off their total debt within the zero percent rate period.
In addition, when you carry over a credit card debt from a prior card or debt, you may find that the applicable interest rate after the introductory period will be lower than the interest rate you are currently paying, but thorough research will confirm this.
Why you shouldn't use a balance transfer credit card
Investigate thoroughly before you commit to a balance transfer card as you may encounter a number of fees and costs in the fine print. Usually the most frequent is when a transfer fee applies, this is the fee a financial institution or bank will charge you for shifting your credit cards debt to the new card. Occaisionally a easy cap fee of $50 dollars, it can also be a percentage of the complete amount being transferred, which means a balance transfer in the thousands could costs hundreds in fees.
Additionally, you need to really intend to pay off the bulk of your debt inside the introductory period as this is where you will find the actual benefit of the program.
Tips and Tricks to keep in mind
Be wary of any joining or high annual fees. You should be able to find a card with no or minimal fees from the range available.
Balance the various rates and see what you prefer. This would depend on how much debt and what your repayment levels and frequency can actually be. If you have $5,000 debt, then six months may be feasible, but any higher you may actually save more going for the low twelve month rate.
Keep in mind that the low rate only applies to the transferred balance, and not to new expenses. These will attract the regular interest rate as summarised on the credit card.
See that the "after introductory" period charges and rates are low and won't lead you straight back into debt.
Know that repayments will first come off the transferred debt.
Be sure to destroy the old credit card once you begin to use your new one, if you carry on to use your old card you could possibly end up with an even higher rate of repayment than before.
Balance transfer
credit cards supply an exceptional chance for individuals to to erase their debt earlier than than allowable on their regular existing credit card. Although, there are several limitations and restrictions to this offer so it is essential to do your research first to make sure you are getting the very best offer for your money.
