The Basics of Credit Card Balance Transfers

By John Fencik

There simply isn’t one of us out there who enjoys paying the high interest rates on credit card balances, no matter how much money you have in the bank or make at your place of employment. I don’t know about you, but I always promise myself that whatever I charge during a billing cycle, I will pay off when the bill comes due. But when I open up the envelope from my credit card company, I realize that there are many other places my money could be well spent- and that means my balance doesn’t get paid in full, thus resulting in loads of pounds paid in interest. That’s why so many residents of the UK are taking advantage of the financial benefits of transferring their balances on a high rate credit cards to one with significantly lower (or even 0%) interest.

Credit card companies are in a desperate fight for your business, so they offer alluring programs (such as 0% interest on balance transfers for 6 months or so) so that you’ll take your old credit card balance and place it on one of their new cards. This is all done with the hopes that you will use your new credit card instead of your old one- hence the new company generates any interest on new purchases, not to mention the charges on your transferred balance when the special program expires. They want you to give them your business, never look back, and never again transfer your balance to another credit card company. Their begging can work to your advantage as long as you understand the basics.

There are mainly two types of credit card balance transfers, the first of which involves a very low interest rate, usually 0%, for a fixed amount of time, perhaps from 5 to 9 months. At the expiration of this time period, the company’s normal interest rate charges will apply, generally upwards of 15% or more. So be sure to stay on your toes, keep accurate records and switch your balances when the introductory rates expire to get the most out of these enticing rates and programs.

The other type of credit card balance transfers involves a low interest rate, maybe 5% or less, but maintains this same, nominal rate for the entire time required to pay off the transferred balance. Any new purchases will be subject to the card’s regular, significantly higher rate (again, around 15% or so), but if you have the self-discipline to not add any additional charges to this card, it can save the hassle of transferring your balances at every 6-month mark and still save you hundreds (or even thousands) of pounds over the life of your credit card balance.

John Fencik recommends that you visit http://www.creditcardexpert.co.uk/balance-transfers.php for more information on Balance Transfers.