Balance Transfer Credit Cards-Are They For Everyone

Balance transfer credit cards have earned a wonderful reputation with their ability to allow consumers to transfer balances off other credit cards onto one credit card and make just one credit card payment. While they're great cards, offering a lot of possibilities, they may not be the perfect card for everyone.

Balance transfer credit cards offer a lot of possibilities to individuals wanting to eliminate the number of monthly payments they make on credit cards. However, these cards do not come with some pitfalls attached. As long as you understand what these pitfalls are, you can reap many of the benefits of credit cards offering balance transfers. Here's an example of how balance transfer credit cards may work. You currently have 5 credit cards each with balances of $800. The monthly payments of these 5 credit cards total $150. The interest rate on these cards varies from 12% to 22%. Suddenly, you're offered a credit card with 0% introductory APR for 12 months balance transfers. What a great idea, right? It can be if you read all the terms and conditions of the card and know what it all entails. With your new balance transfer credit card, you know longer have 5 different payments totaling $150 per month but rather have one payment of $100 per month. Because of the 0% interest for 12 months, you're also not paying interest on your balances for a year. You're actually saving a lot of money. However, what is the interest rate on purchases made with your balance transfers credit card? Also, can you pay off your new purchases without paying off the transferred balances first?
These are some of the important details of cards offering balance transfers that need to be researched before using these credit cards. Otherwise, you can find yourself paying a lot in interest charges on new purchases. If your payment is not made on time, the interest rate on your balance transfers credit card may increase to an amount as high as 20% or more. One of the most important terms of the balance transfers credit card that you need to know is how they treat purchases in terms of interest rates. Most balance transfer credit cards are for individuals wanting to pay off old credit card debts and not make new purchases. New purchases should be reserved for other credit cards that have low interest charges.
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