Credit Card Balance Transfer Deals
Credit card balance transfer deals have enabled countless of struggling consumers with a way to move charge card balances around to lower introductory offers and avoid oppressive interest rates that keep balances high. With as many as seventy percent of all households living paycheck to paycheck over the years, usually caused by high credit card balances and "never seem to decrease" monthly payments that are often accounting for more than thirty percent of some family incomes, a particular way a person might consider lowering unsecured debt is through the use of credit transfer deals. In good economic times when credit is flowing like gas on July 4th, the temptation to run up high balances is certainly strong. When things get tougher like they always do in cyclical routine, consumers have to get very smart about how their debt is managed.
With unsecured debt interest rates often running around twenty percent and effective annual rates even higher, a smart move is to try and secure those credit card balance transfer deals that float home seemingly every day in the mailbox and some of these offers can be as low as zero to five percent APR. The strategy could then become paying as much on a remaining high interest charge account while making a minimum on the low balance move to another plastic charge account. A lot of questions need to be asked however before making the move from loan provider to provider. God will not keep Christians from the all the bad things of life that plague every other person, but He has promised and keeps that promise to be a provider to them that love Him. "For the Lord God is a sun and shield; the Lord will give grace and glory: no good thing will He withhold from them that walk uprightly." (Psalm 84:11)
One of the first issues anyone considering one of the many credit card balance transfer deals is the length of the introductory rate. Three, six or 12 months will make a huge difference in how much a person can save in the move from one charge account to another, especially if there is a transfer charge. That's right folks, these wonderful credit card balance transfer deals aren't always free of charge, and there may be a balance-transfer fee. And that may be as much as four percent of one's balance, both let's do a little math. Suppose there is a five thousand dollar balance on a high interest deal that is going to be transferred to a zero annual percentage rate for a single year account. The moving around fee is four percent or two hundred dollars. Assuming minimum payments are made on the account, a person will actually go in the hole about one hundred and ten dollars by doing the transfer. In fact, a person would have to pay off most of the loan by the end of the 12 month period to make the transfer worthwhile.
Okay, most of the depressing stuff is out of the way, now more things to consider. If a consumer is considering one of the credit card balance transfer deals check to see what the APR will be after the intro rate goes away. And don't just look at the annual percentage rate but look at the effective percentage rate. An effective percentage rate is the real rate if interest which occurs when interest is compounded daily or weekly or monthly on the remaining balance. Many cards have daily compounded interest rates which may make the effective rate several times higher than the annual rate that is actually advertised. And then see if the deal applies to all purchases made on that card for the intro time or just on the balance. Making the wrong assumption make cost the consumer even more in the long run.
Hey, what about that annual fee charge? Does the new account have a fee and if so, putting that money in with a fee for moving from one to another and a person really isn't making any headway on the transfer idea. Now here is another issue that needs answered and that is balance transfers after the initial one is completed. In other words, what if a person wants to transfer some other debt balance over to this same low introductory rate account later on in the six or twelve month period. Whether or not that money also qualifies is something to consider when mulling over on the many credit card balance transfer deals.
Since credit card debt is so incredibly easy to amass, a person really needs to look what got him or her into this situation of needing to use one of the credit card balance transfer deals that came in the mail. Charge cards have become the American way of living above one's income means, but the chickens always come home to roost and the result is either doing the transfer thing or having to eventually talk to credit counselors and go through a repayment program that hurts even more deeply someone's credit score. Here is a huge warning about someone already strapped with a lot of unsecured debt and then taking on another of the credit card balance transfer deals. If a person transfers money over to a low interest account for a short period of time and then is late paying on just a single payment by a few days, the whole deal can be dismissed by the credit card company and suddenly a very high rate is applied to the transfer amount.
Credit Card Balance Transfer OffersCredit card balance transfer offers can provide a useful way to pay down a debt, but only when the right company is chosen and the rules are followed accurately. The fine print for these offers may put a person in worse financial condition then they started in. In addition, even offers that start at 0% may not stay there or required a minimum amount of payments per month to avoid monthly charges. Customer service representatives for these companies will not outright tell a person how much it will cost to transfer because they want the business. It is up to the consumer to read the terms before transferring funds. In some cases a small loan from a bank or credit union may be a better option.
Evaluating all options for cost and benefit both financially and reputation of credit will determine the best choice for a specific situation. Some people simply need short-term help, therefore the 0% for 3 months type of offers may provide enough aid to pay off debt. However, at the end of the 3 month period a consumer may find themselves paying as much as 25% every month. In addition, even if the consumer pays off the debt in the appropriate amount of time, they may get charged for not putting anything new on the card after the payoff is complete. In this case a small loan from a bank or credit union may be a better option, however it is still important to check into service charges as well as early payoff. The best balance transfer credit card will not have any penalties either financially or in regards to financial reputation. However, a company would not make any money unless they charge for something.
When reading the terms for any credit card application it is important to never assume any terms of service such as when the terms say APR good until April. This statement can mean many different things including charges made until April 1st, April 31st, and billing mailed on those dates that indicates purchases made the whole month before. So basically the range of dates can span from March 1st to April 31st. In addition, make sure it is clear how many charges must occur in a billing period in order to avoid minimum penalties. Even though a person may have the greatest plan and intentions in using the best balance transfer credit card, unexpected circumstances in life happen resulting in missed payments. The consequences to this problem may include significant past due charges as well as a hiked interest rate and scar on personal financial report. Watch out for universal default as well. This means even if a problem occurs only with one card a general scar on the personal financial report will occur discouraging any future lenders.
Planning for a successful financial future is just as important as carefully fixing past mistakes. As unpleasant of a task as it is, reflect on the situations that created the current situation. This may include unforeseeable circumstances, however a savings account may have alleviated unmanageable debt. If a pattern is found concerning low cash flow during high need times, then a strict budget may be useful. This is especially true for people that do not receive a consistent paycheck, which may require a record of yearly income in order to accurately record an average income to develop a budget around. Credit card balance transfer offers are tempting, however simply rearranging finances and avoiding overdraft fees as well as late charges may solve the problem. What appears as the best balance transfer credit card for one person is not always the solution for everyone. Basically, the best choice is determined by the reason for the original debt. The answer leads to better knowledge concerning weaknesses to stay away from and strengthen to take advantage of.
Whatever the amount or the reason for needing this type of assistance, staying on track is necessary for success. This includes a budget, payment calendar, and accountability partner. Even if a person believes they follow by a budget or manage their money responsibly, the hard fact is that some event created unmanageable debt. Many easy to use computer programs offer budget planning as well as bill paying options. Choosing to use cash instead of debit card may be harder, however there are no overdraft fees with cash. Setting up a separate account for bills paid through electronic bill pay may offer some protection for those items requiring bank assistance. For wisdom [is] a defence, [and] money [is] a defence: but the excellency of knowledge [is, that] wisdom giveth life to them that have it. (Ecclesiastes 7:12)
Minimizing amounts paid out on the best balance transfer credit card will free up money to pay debt and minimize new problems. Remembering that credit card balance transfer offers are targeted toward irresponsible spenders increases the awareness of scams and policy stated under the fine print. Getting help from friends and family concerning accountability for spending and ideas on how to save increase a persons chances of successful financial endeavors. Creditors and customer service representatives for these companies are certainly not going to encourage paying off debts. Credit card balance transfer offers are marketed toward people who continually get themselves further and further into financial trouble because that is how these companies make their money, however if a financial plan is executed correctly using their teaser rates responsibly the benefit is to the consumer.