0 Balance transfer credit card
Its when one credit card repays debts on other credit or store cards for you, so now you owe the money instead, hopefully at a special cheap rate. For example:
Current debts: Timcard 3,000 at 18%, Gregcard 1,000 at 16%.
New credit: the Murraycards 0% for 9 months on balance transfers.
What happens: Ask the Murraycard to balance transfer the debts, it will then pay 3,000 to the Timcard and 1,000 to the Gregcard.
New situation: The Tim and Gregcards are debt free, and you now owe the Murraycard 4,000 at 0%.
The interest rate is the cost of the debt; 20% on 1,000 means you pay 200/year, but while interest reductions cut the cost, they dont impact the actual amount you pay each month because with credit cards you choose the repayments; the more you pay the faster the debt disappears.
Yet each card has a set minimum repayment; those struggling to meet this should check the new cards minimum will be affordable.
A balance transfer is a distinct type of transaction:
Dont assume spending costs the same. Usually cards with cheap balance transfers have a much higher purchases rate; often 15% plus.
Expensive debts from spending cant be paid off, they're trapped. If youve debts from both spending and balance transfers on a card, lenders almost always automatically bias your repayments to pay off the cheap balance transfer debts first.
This is hugely profitable for them. It leaves the expensive spending debts trapped, speedily accruing interest, impossible to repay until all the cheap debts are cleared, raking up a fortune in interest.
In fact its often cheaper to get a separate card for spending even if it has a higher spending rate, though of course better still get one with a cheap rate Therefore as a strict rule, never, ever, ever spend on these cards! Just transfer the balance and put it in a drawer.
The only exception are the few cards which offer the same cheap rate for spending and balance transfers over the same length of time; in this specific case it's not an issue.
Balance Transfer Credit Card Offers
Today its possible to transfer the higher interest credit card balances onto a credit card with a lower interest rate. It is possible with balance transfer credit card offers. Now you can find the best credit card offers among the available online credit card offers. You can search for the best credit card rates that are offered by credit card companies here. You can find credit card offers with 0% intro APR for up to 12 (Platinum MasterCard, Visa or Discover Platinum card) or 15 months (Blue from American Express). If you settle on low interest balance transfer credit card offers, compare credit card offers and choose credit cards by the rewards program they have. Remember that the best credit card offers for balance transfers have credit card fraud protection.
At our website you can find 0% balance transfer credit card offers or low interest credit card offers, and then compare credit card offers. Next step is making an online credit card application and applying online for a credit card. We have all the best credit card offers with low interest balance transfer for customers with all type of history (for fair, bad, no credit we have secured credit cards). Maybe youre interested in business or low rate balance transfer credit card offers, 0% balance transfer credit card offers or low APR credit cards, see all database of the best credit card offers by top credit card companies, compare credit cards, fulfill an easy application form and apply online for a credit card!
Guide to Taking Advantage of 0% Balance Transfer Offers
Based on requests from visitors, I have decided to compile my own guide to taking advantage of the credit card companies' 0% Balance Transfer Offers. I hope this guide will help everyone understand how to maximize the value of these offers and help boost your earnings for the year. If anyone has additional suggestions or tips please post them in the comments.
What is a 0% Balance Transfer offer
Most of us frequently get these annoying solicitation from credit card companies trying to get me to sign up for their credit card. Infact there are probably some in the advertising on this web site right now. Most of these offers include some gimmick or promotion to entice you to sign up for these offers.
A typical offer I see is "0% APR on Balance Transfers until 2007!" where the date given is typically 8- 12 months in the future. Also, keep in mind the longer the balance transfer offer lasts the more you can make. I typically wait until I receive an offer that is at least 0% APR for 12 months. This is a 0% Balance Transfer offer read on to find out how you can take advantage of them.
How do you screen out the less attractive offers
Once you have a 0% Balance Transfer credit card offer, you need to review the fine print to make sure there are not any catches with the offer. The biggest catch out there in a small "balance transfer fee" typically 3% (but varies with each credit card company).
You want to make sure there are no balance transfer fees other fees associated with taking out a balance transfer. (Note: You can still profit if some of these fees are in the offer, but since these offers are frequent, I would just recommend waiting for a better offer).
Now that I have an offer, how do I get access to this 0% balance transfer
Fill out the application. I usually wait till I get the card in the mail so I know exactly what my limit is. When I call to activate the card, I begin the process of initiating a balance transfer. There are many techniques to choose from:
A) Ask for a check made out to you. I have done this for my Citibank credit cards. When you call to initiate a balance transfer I ask if I can get a check made out to myself. Its that simple. (Note: make sure you wont get a cash advance fee if you do this)
B) Apply the balance to other credit cards.
• B1) If you have a soon to be expiring 0% balance transfer then just ask that the balance transfer be used to pay off the balance on the old account.
• B2) Depending on how much you purchase every month on your credit cards, ask that the balance transfer be applied to you primary credit card to pay off your existing balance and any credit on you primary credit card account you can consume in future purchases. Instead of paying the balance on your primary credit card you spent, earmark those funds as your balance transfer funds.
• B3) If the first 2 options don't work, you can also consider having the balance transfer applied to a unused credit card account. When the transfer is complete you can call the credit card company and ask that a check for the positive balance be sent to you. (Note: I have heard from friends that some companies may not be willing to issue a check for the credit/positive balance so double check before trying)
C) If you have a HELOC have the balance transfer applied to this loan. Then you can write a check to yourself for the amount transferred.
D) If you have any type of loan, consider having the transfer amount paid to that loan. If you are planning on paying down/off the loan in the near future anyway you may be able to make a better rate of return by using the balance transfer to pay it off sooner rather than later.
I have used techniques A, B1, B2, and C all with great success to get access to the balance transfer loan.
Now that I have the 0% balance transfer, what do I do with it
The whole reason you are doing this is to earn money, so this is a very important step. I always look for the highest yielding risk free investment.
Here are some suggestions:
A) Online high yield savings accounts such as HSBC Direct, ING Direct, or EmigrantDirect.
B) If you have an outstanding balance on a HELOC or Line of Credit and you can pull back out money at anytime, consider paying down the HELOC or Line of Credit. You may make a better return on your money by saving on the interest payments.
C) Short term treasury bills on TreasuryDirect.gov.
D) Short term CDs such as a 6 month CD.
I have been putting my balance transfers in my EmigrantDirect and HELOC accounts.
How do I pay the balance transfer back
Every month you should make the minimum payment on this credit card with the balance transfer. The minimum is usually somewhere around 2% of the balance. On a $10,000 balance transfer we are talking about a payment around $200 a month. I usually move the minimum payment amount from my savings account and try to pay the minimum payment as soon as I get the statement to avoid any risk of being late on my payment. To date, I have never been late with one of these payments.
I usually plan on paying back the entire balance of the balance transfer the month before the 0% APR expires. So if the offer expires in June 2006, I would pay the loan off in May to ensure I don't risk accumulating any interest on the loan. You can read the fine print of the credit card offer to determine exactly when the 0% APR expires and when the credit card company begins charging interest.
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