What is a balance transfer?
If you’ve spent a lot of money on one credit card, transferring the balance to a card with a lower interest rate can be a great way to simplify multiple debt payments as well as save on high interest charges.
It essentially amounts to paying off credit card “A” with new credit card “B”.
Using a credit card 0% interest balance transfer may be ideal for consolidating debt.
Use of the card isn’t only limited to credit cards. You can also transfer other loans to a no-interest balance transfer credit card.
Keep in mind that a balance transfer fee will be charged, and that the entire process isn’t free.
The revert rate will kick in at the end of the set free interest period. The interest rate will increase after a certain period of time.
Not everyone qualifies for this credit card. Good credit is required to qualify.
How to use a credit card 0% interest balance transfer in a responsible way:
Pay down high interest credit card balances more quickly.
Use the card to pay down other loans.
Use it as an emergency fund, so that you can avoid spending even more on the card. You need to make sure that you watch your financial behaviour during the introductory period. Keep your credit record clean and don’t accumulate unnecessary debt.
Keep good records. Make sure you know how much you need to repay on your credit card. If you don’t make the minimum payments, your 0% interest deal may be cancelled. You could be stuck paying a higher interest rate. Make sure that you make payments diligently.
Make sure that you pay on time. With credit card fees and added interest you’ll owe far more than you did before the transfer.
Resist the temptation to use the card and consequently add to that balance.