Choosing a Balance Transfer Card

Costs and benefits of balance transfer credit cards

Benefits; major benefit is the interest savings made on transfers due to the very low balance transfer rates. As a result cardholders can pay off debt faster and even use these cards as a way to consolidate credit card debt. Consolidation can save even more money by allowing the cardholder to cancel their unnecessary credit cards.

Costs; the terms and charges of each credit card varies widely amongst lenders and there may be fees applicable to each transfer either charged at a fixed amount or a percentage of the transfer value varies between. These cards can also have a high annual fee attached that may offset any interest savings made. Finally cardholders of balance transfer credit cards should be aware of conversion rates because not all cards convert to the purchase rate but can sometimes revert to the higher the cash rate.

Which Balance Transfer credit card is right for you?

Consumers are not short of choice when it comes to balance transfer credit cards. Recent trends in consumer demand have seen most lending institutions respond by offering one or even a range of balance transfer offers with their credit cards. However don’t be fooled into thinking that they are all the same and that comparing the rates with expiration terms will suffice. Take the time to review the different cards available to find the one for you. Balance transfer credit cards like all other credit cards have set terms and conditions and fees and charges affixed that vary from lender to lender. Like all other types of credit cards, the balance transfer credit card for you is the one that caters to your personal needs and financial circumstances. More specifically it will depend upon the size of your debt balance and the time you expect it will take you to repay this balance.

0% – 7.99% balance transfer for 6 months

These cards are best for cardholders who have debt balances that can be paid off within 6 months. If this is you then you can definitely take advantage of the best balance transfer rates currently offered at 0% balance transfer for 6 months and simply cancel the card after you have paid off the balance and no longer want to use it. Keep in mind however that annual fees may apply and that this card may not be worth your while if you only have a very small debt balance.

1.9% – 5.99% balance transfer for 9-24 months

Cardholders with more sizeable debt may benefit from cards that offer low balance transfer rates for 9 – 24 months. These rates are usually higher than those that run for 6 months and normally attract higher annual fees. However they are still a lot lower than the purchase rates you may be incurring on your current card.

4.99% – 9.99% balance transfer for life

For those with a substantial amount of debt on their credit card who do not expect to repay the balance for the foreseeable future may consider life-time balance transfer cards. These cards offer a rate that is higher than balance transfer cards that run for a shorter period of time; however is still a lot lower than market purchase rate. Unfortunately these cards are not very common and do attract very high annual fees.

Read our introduction on Balance transfer credit cards.

Published: 3 December 2010

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