Find out about the three basic choices you have with balance transfer cards. Know why you should choose one balance transfer card over another depending on your circumstances.
Coping with the burden of a credit card debt is bad enough, but not knowing which way to turn to ease matters is really worrying. Thankfully,
balance transfer cards are one very useful option, but even then you might find yourself confused with the array of cards on offer. So what is the bottom line with balance transfer cards? What types are available, and which one would suit you best?
First of all, just so we’re all on the right page, a balance transfer card is a credit card with an introductory offer on balance transfers. This will allow the consumer to transfer an existing credit card debt across to the new card and significantly reduce the rate of interest they are paying for a specified length of time.
The six months balance transfer card
This is the most talked-about deal, because this is usually offered with a zero percent interest rate. That gives six months where the pressure is largely taken off, and therefore more of your repayments can be directed towards the debt itself, rather than a portion going towards interest charges. This balance transfer card is ideal for anyone who has a debt that can definitely be managed down within six months, which may seem an obvious thing to say, but unless it is paid off in that time, the regular rate of interest will kick in. In some cases you may even be hit by the cash advance rate on any leftover debt, which is around 20%.
The twelve months balance transfer card
This works the same way as the six months deal, only for twice as long and at a slightly higher rate of interest that may be around 3% to 5%. Although this does not appear as attractive as the 0% offer, those extra six months may make all the difference in your being able to clear your debt in time. Better a whole year at 3% than six months at 0% followed by six months at 20%.
The life-of-the-debt balance transfer card
Also known as the balance transfer for life credit card, this card gives you the opportunity to fix the interest rate on your balance transfer until you have paid it off. You may be looking at an interest rate of 6% to 8% for this. Anyone who has a significant debt that realistically cannot be paid off within a year or so should consider this option. These are not as common as the short-term balance transfers and you are more likely to find them on prestige platinum cards, but it is still worth making enquiries and checking the market, even if you are not eligible for the platinum offers.
Comparing the market may well bring up nine month balance transfer deals, or eighteen month balance transfer cards offers, but the above three are the most commonly found.
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Posted on Wednesday, March 31st, 2010 at 12:04 pm
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