If you haven't been credit card shopping recently, you'd be amazed at the variety offered today. In addition to the different interest rates, the extent of rewards or perks offered is vast. There are cards offered to fit everyone's needs. Good credit, bad credit, in between, 0% APR introductory offers, sky miles, cash back,... just to name a few.
Of course the financial experts would tell you to watch that credit card debt, pay off the balance every month so you don't have to pay interest. If you do have high balances the experts would also tell you to take out a loan on your home so you could get a lower interest rate and tax advantage too. But that's not always realistic or possible for some. Perhaps they just bought their first home and the equity is limited. There could be a number of reasons why the professional financial advice just won't work. So what to do?
What if you just purchased your first home and your credit cards had balances with interest being accrued each month? Then say you like to travel, but you have these bills. Could you plan a trip in the not too distant future? I believe you could.
Most of the credit card companies today have 0% APR introductory offers. This rate is good for six to twelve months and many times is valid for balance transfers and purchases. In addition, many offer rewards such as air miles.
First figure out the most you could pay each month on these accounts combined. Apply for a card that offers 0% APR for twelve months and transfer the balances that are accruing interest to this new account. Now remember, you're saving interest each month. Then you could use the credit card as much as possible for daily expenses, keeping track of and setting that amount aside each day. At the end of the month, you should pay the amount determined which you could afford on the balance transferred and then pay the entire amount charged for the monthly expenses.
By doing this, you would be paying off the older balance with a 0% interest rate and earning rewards at the same time. At the end of the twelve months you may very well have enough points to take that planned trip. Your credit card balance should be paid off almost completely.
When things seem out of reach, you can achieve them, as long as you have a plan.
It is estimated that about a third of people fail to pay off their credit or store card balances in full every month, and therefore pay interest on the balance. If that applies to you, the chances are you could save money by applying for a new credit card which offers zero (or low) interest balance transfers.
The way this works is that you take out a new credit card offering such a deal and immediately ask them to pay off the debt on your old card. The balance on your old card then becomes zero, and the entire balance goes on to your new card instead, with its zero or low interest rate.
A number of card issuers offer these deals. Zero rate offers typically last from five to twelve months. If you are confident that you can pay off the entire balance during this time, they are a good choice for saving money.
If you think it may take longer to pay off the outstanding balance, a better option may be to apply for a card which offers a low rate for the entire life of the balance (i.e. until it is repaid). American Express™ offers a fixed, low APR for the life of the balance with its Platinum card.
If you are currently paying interest on a balance with your current card, it makes sense to transfer your existing store or credit card balance to another provider. There are a few points to watch out for, however.
1. Check if there is a charge for balance transfers
Balance transfer fees are becoming more common as credit card issuers try to recover some of the money they lose by offering interest-free periods. Fees range up to 2% of the total balance. However, there are still several card providers offering free balance transfers.
2. Remember to pay off your balance every month
Even though the card issuer offers an interest-free period, you will still have to make the minimum monthly payments by the monthly due date, or you will be charged interest.
3. Avoid spending extra on the card used for the transfer
Most credit cards pay off balance transfers preferentially, so if you incur any other debts on the card, they will not be discharged until the entire transferred balance is paid off. That means any new spending will be “trapped” on the card, accruing full interest charges. If you are using your new card to service a balance transfer, therefore, do NOT use it for additional spending as well – use another card instead.
4. Switch again when the introductory period expires
If you have failed to pay off the balance completely once the 0% introductory rate for balance transfers expires, you could apply for another card and transfer your balance again. However, if you plan to do this you should always remember, in the month the 0% deal ends, to move the debt again to another 0% offer. This means you will need to apply for another card about six weeks before the introductory period ends. You will need to be well organized and remind yourself to do this.
5. Note that your credit rating may suffer
If you apply for a number of credit cards, especially at the same time, your applications will be noted by the credit reference agencies, and your credit score may suffer. The most important preventative measure is to spread card applications out. Do this and most people with reasonable income and no bad debts will be fine, though be aware that there will be a small risk to your ability to get competitive credit in future.
Labels: Balance Transfers Credit Cards
If you have a number of credit cards and you’d like to consolidate your payments, a balance transfer credit card can be the right decision for your finances. Not only are many balance transfer credit card companies offering lowered or even zero percent interest rates, but you might even be able to finally pay down that debt that you’ve accrued.
1. Determine the amount you want to transfer
While most balance transfer credit card companies are willing to transfer larger balances for those with a good payment history, for those that do not have excellent credit, you might find that only small amounts will be transferred. And while this helps, it might not reap the rewards that you were expecting. Talk with the balance transfer credit card before deciding to sign up for their card to be sure that the amount you want to transfer will be allowed.
2. Find out the restrictions
Most of the time a balance transfer credit card company will allow you to enjoy a low or zero percent interest rate when you follow their rules. This means that you should work to understand their rules before signing up. You might not be able to purchase anything on the card for a certain amount of time, or you might have to purchase something within a certain amount of time.
3. What is your time limit?
While it would be nice if balance transfer credit card companies could give consumers unlimited time to enjoy the lower interest rates, this isn’t the case. Find out how long the introductory balance transfer credit card interest rate is good for—the longer the better.
4. Can you get money back?
Some balance transfer credit card companies also offer you money back for new purchases on their card. While you probably won’t get that cash back on the transfer, you can begin to reap rewards for future use. If you think that you may keep the balance transfer credit card for a while, this is a good thing to investigate.
5. What is the annual fee?
When you’re trying to limit your payments, you’ll want to be sure that the balance transfer credit card doesn’t start off with an annual fee as well. Many balance transfer credit card companies do not make a customer pay a fee initially, but some might charge the customer after the initial time period is over.
A balance transfer credit card can help you reduce your monthly payments and get you on the road to a debt-free life, but only if the card is working for you and not against you.
Labels: Balance Transfers Credit Cards
For people who could not seem to manage their finances, they end up getting into debts. This is especially true to those who have accumulated too many debts that they can no longer handle the problems anymore.
In reality, 81% of the households in the U.S. today have at least one credit card. But sad to say, out of this percentage, it was reported that the average credit card balance that they accumulate is $8, 387.
The point here is that if these people will not trim down the balances that they accumulate on their credit cards, chances are, they will really get into bigger trouble.
When that time comes, the only way to correct the problem is to employ drastic solutions such as credit card balance transfers.
Balance transfers simply means to transfer the remaining balance in the credit card to another card in order to eliminate the presence of a big interest rate. Usually, people opt for credit card balance transfers so that they can get a new card with lower interest rate.
The “low interest rate” features of most credit cards who offer balance transfers are actually known as teaser rates. These credit card companies offer much lower rates so as to entice people to transfer to them.
What these people do not know is that most credit card companies that offer low interest rates for balance transfers are actually applying the interest rate from the day the consumers had transferred their balances. This goes to show that with credit card balance transfers; there is actually no “interest-free” time.
Another thing is that the low interest rates that credit card companies usually offer when transferring balances are only good for a certain period of time, usually, within a 6-month period. That means when the allotted period is finished, the regular interest rate charges apply.
Moreover, the rules in credit card balance transfers, when it comes to late payments are much stricter. For instance, if a person fails to pay his or her due payment on time, the low interest rate is instantly replaced by a higher one.
What the consumers do not realize is that the low interest rates are only good on balance transfers, but once they have made some purchases, higher rates will be applied. These are all stipulated on the fine print. The problem is that most of the credit card users do not take highly of the things written on the fine print.
Another problem with most credit card users who opt for balance transfers is that they have this thinking that their debts are paid off. What they do not realize is that the process is simply transferring the balances and the debts remain the same. This is because most of the credit card companies that offer balance transfers use the phrase “pay off your balances on other cards” in their advertisements.
Labels: Balance Transfers Credit Cards
Though most 0% interest credit card balance transfers are conducted by ndividuals business can also take part in this balance bargain. Several credit card providers offer 0% interest credit card balance transfer to businesses. Let's take a look at a couple of these business offers.
The first, a Mastercard, offers 0% interest credit card balance transfers for the first fifteen months. This interest rate applies only to the transfers - not to any purchases made during the introductory period. The annual percentage rate (APR) for the purchases is low however - a good 7.99 percent. The computation for the APR is based on the average daily balance that includes any new buys. There is no annual fee, and this card offers a credit line up to $50,000. The grace period on this 0% interest credit card balance transfers offer is 25 days, and there is no setup or transfer fee.
This business credit card carriers a maximum late fee charge of $39, with a minimum of $15, depending on the balance at the due date. The fee for charges over the credit card limit also caps at $39. With this credit card offering 0% interest on credit card balance transfers, there are no travel, shopping or cash rebate offers.
Another of the 0% interest business credit cards offering balance transfers charges an annual fee of $75 and a $35 charge for any additional credit card issued on the account. It does, however, waive the first year's fee if the credit card application is completed online. Late fees never exceed $30, however, there is no grace period at all. There is also an annual $30 fee for the program that offers membership rewards. These rewards include reports on expense management, an everyday savings program for purchases such as gas and groceries, and savings with designated merchants in the area of hotel, auto rental, computer equipment and overnight delivery.
The third of these business 0% interest credit card balance transfers offers gives five percent rebate on when you fill up at your favorite gas station, and a six month introductory period for balance transfers only. The credit line with this card could be as low as $1000 or as high as $50,000, with an APR approximately 10-18 percent dependent on the business' credit worthiness. After the introductory period, the transferred balance carries a low 4.99 percent. That is a fixed rate and will remain until the balance is paid in full.
