TRANSFER CARDS: TYPES

2007-03-08 10:33:40

( Financial )



What Are Transfer Cards?

Transfer card is a type of credit card that allows you to transfer balances from one credit card to another. New clients are usually offered favorable rates on transfer cards by credit card vendors. Thus, some people take advantage of these favorable rates to manage their credit. It can even be used to pay off an entire loan when the credit limit offer is high.

Types of Transfer Cards

Zero percent balance transfer and fixed rate balance transfer are the two types of credit card balance transfers. These are usually offered to new clients to entice them to switch card. Resourceful individuals sometimes used the benefits of these transfer cards to reduce interest payments on their bank loans.

Zero Percent Balance Transfer

Clients incur no charges at all when they transfer the balances of their credit cards to zero percent balance transfer cards. Credit card vendors offer zero percent balance transfer for an average of six months to a year. The rate of the credit card will revert to its standard variable rate after the zero percent balance transfer offer expires. Some people switch to another credit card one month before the rate of their credit cards reverts to its standard variable rate. It helps them avoid paying higher interest rates, thereby, saving a lot of money.

Fixed Rate Balance Transfer

Clients can retain the same credit card and still enjoy the benefits of a transfer card by applying for a fixed rate balance transfer within the same credit card. You are transferring your balances to a fixed rate without switching credit card. The fixed rate is still lower than the standard variable rate currently being applied to your credit card. Average rate is usually offered at five percent. Thus, clients avoid the hassle of procuring application documents for a new credit card.

Dangers of Transfer Cards

Clients are cautioned on the use of transfer cards. Credit scores are actually put at risk with frequent use of transfer cards particularly on a span of shorter periods. Credit scores actually diminish every time lenders asked about credit history of borrowers to verify credit card application. Limiting inquiries on credit history is actually the strategy to maintain and improve credit scores.

Make sure you balance your goals of maintaining your credit score and transferring cards to reduce interest payment. Get the benefits of card transfers without putting your credit score in jeopardy.


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