How to Play the Balance Transfer Game Successfully

Nowadays, it seems all too easy to spend up big on your credit cards, forgetting that at some point it has to be paid back. If you have a substantial credit card debt, and are finding it almost impossible to keep up with the payments, then maybe you need to look at saving some money by taking advantage of credit card transfer. Basically, if you transfer the balance of one credit card to another, you can often take advantage of introductory or teaser rates. These are offered a couple of times a year by the major credit card companies. Usually the teaser rate will last for either 3 or 6 months after you receive the card. Depending on the offer, you can pay anywhere from 0% to 9% on the transferred balance. This is great if you're transfering a balance from a high interest card across to the new card. You can save a lot of interest.

One thing to watch out for, though, is that many of the banks will treat a balance transfer the same way as a cash advance. So you need to check and see if there are any extra fees involved on the new card. If interest is being charged, find out whether it's from day one, or whether it starts after a set grace period. This can make a big difference if you're planning to make a lump payment fairly soon after transferring the balance. If you shop around, you may be able to find a teaser offer where the transfer charges on balance transfers are waived during the promotion. This can be a big saving.

You've probably heard it before, but it's still very good advice – read the fine print. Make sure you've at least read all the information about balance transfer and possible fees involved. Look for the term 'flat balance transfer' which usually is followed by applicable fees. If you can not find anything relevant on the application information, then make sure you ask!

If there's a grace period, use it. Try and coordinate the balance transfer from your high interest card so that you get the maximum amount of grace period before interest charges begin. This usually means timing the transfer so that it arrives just after your next bill is issued. Depending on the bank's policy, that may stretch your grace period to as many as 60 days. If you're transferring a large amount, that can add up to some big savings. If the credit card you're considering does not have a grace period, ask yourself whether this is really an offer you want to accept.

Once you've transferred your balance to the low interest teaser card, you will quickly receive a bill. Make sure you pay before the due date. Obviously you need to meet the minimum payment, but whenever possible you should budget to pay more than that, and preferably a lot more. Credit card companies love it when you just scrape in with the minimum payment, because it means you're probably paying almost nothing off the debt, and so next month they'll charge you the same amount of interest again. It will take you years to pay back the debt that way, and that's only assuming you never use the card to pay for anything else. No wonder credit card companies are so keen to hand out their cards.

As a short-term strategy, transfer your balance to a new credit card can be a big help, but it's never going to be a permanent solution. It can also end up being a very expensive solution, particularly if you do not close the old credit card and you spend up to its maximum again. If you start doing that, you'll find yourself in a much larger financial mess very quickly, and will wish that you never even think about transferring the old balance. So play the balance transfer game wisely.

Source by Tim Gorman

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