And Then There Was One: How do balance transfers work on credit cards?
You’ve been using your credit card for quite some time now, and because of that, you’ve accumulated some debt. Because of this debt, you are looking for other options, and you come across balance transfers. Doing a quick credit card comparison, you reach the conclusion that this might be the proper way for you to be able to save some money.
But is it, though? Before signing up for anything, it might be best to find out exactly what you are getting yourself into. Balance transfers are not as simple as many people think they are. There’s a lot going on behind the scenes in the fine print you need to consider before initiating one.
So, what exactly are balance transfers?
It’s true, doing a balance transfer does lower the cost of one’s credit card debts. By doing a balance transfer you basically consolidate two or more debts into one credit card. Comparisons made between maintaining one credit card against maintaining several cards show that having one card is definitely the simpler option. Also, by just having one credit card, you have greater control over your outgoing cash flow as well.
Essentially, transferring your balance means you take what you owe one financial institution to another. You have the option of moving part of the amount owed or the entire amount. The reason for why a lot of people opt to have balance transfers is because it allows them to take advantage of lower interest rates that are usually offered. To sum up, balance transfers allow you to pay lower than the actual amount of your existing debt and make it easier for you to manage your finances by having one debt and account to take care of instead of several.
There are a couple of ways of signing up for a balance transfer. One is by going to the bank and speaking to the teller about this option. This is beneficial as it would give you the opportunity to ask as many questions as you can to fully understand the nature of balance transfers.
Another way, one that is preferred by the more self-reliant individuals out there, is by going online and doing it yourself. While there is no representative of the bank for you to actually speak to, you may have to do all the research on your own. Fortunately, there are websites that have credit card comparison services and other similar functions that would help you with the task of consolidating your balance.
Remember There’s Usually a Fee for Balance Transfers
One important thing to understand, of course, is that the balance transfer option is not free. More often than not, banks and financial institutions charge a fee for doing such a transaction. The specific amount of these fees depend on the size of the transfer and the length of the introductory period. This is one aspect of the balance transfer you may want to take into consideration before you decide on going through with it. Along with the balance transfer fee, you may want to look into transfer limits or the maximum amount you can transfer onto a new card.
All in all, balance transfers for credit cards are very beneficial depending on your particular financial situation. Just be sure to assess your financial standing accurately before signing up.
About the author:
Gilbert Bermudez writes for CompareHero, Malaysia’s leading bank card, broadband, and insurance comparison website.
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