Balance Transfer Offers: For the Prudent User

2007-03-08 10:33:40

( Financial )



RELOCATING CREDIT CARDS

The premise of balance transfer offers is very simple - take your existing debt from one credit card and transfer that to another card.

The bank or financial institutions issuing the balance transfer credit card will pay your outstanding credit card debts and you have a new balance but with lower interest rate.

This is the main come-on of balance transfer offers – the transfer interest is lower than your current credit card rate, allowing you to save on monthly payments. However, this low transfer interest rate is contingent upon conditions that you have to meet in order to keep the low transfer interest rate arrangement.

A common stipulation of most balance transfer offers is that for a given period, you have to make a certain amount of purchases made against your balance transfer credit card. If you fail to do this, the low transfer interest rate arrangement will be void.

PUCHASE REQUIREMENT

This purchase requirement depends from card to card. Some just stipulate a number of required purchases, while others require a certain purchase amount. Given a choice, balance transfer offers that have purchase number requirement are better than getting a purchase amount requirement.

Under a purchase number requirement, you can make very small purchases and still follow the stipulation. By doing so, you get to keep your low transfer interest rate and not accumulate to many credit card purchases which caused your problem in the first place.

Balance transfer offers can really work if you intend to pay off your entire credit card debts soon, and are just using the low transfer interest rates to save more. However, balance transfer offers may not be a very good option if you will keep using your credit card without regard for the stipulations that govern its use. Failure to do so may end up costing you more.


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