Balance transfer is shifting the loan amount from one financier to another. You can do balance transfer to save money in paying interest as many balance transfer credit card companies offer loan for the first six or 12 months without any interest or fees. But if you are planning balance transfer, you should understand some fundamentals of the business. The annual percentage rates or APRs and the fees charged for such transactions matter most to your debt.
APR is the rate of interest you will pay to the lender for the balance transfer and for the amount you will owe him / her. APR is also charged to the user of the credit card for purchases and cash advance. You should understand the APRs if you are applying for a card or a loan. Most balance transfer card offer 0% APRs for 6 to 12 months with no transfer fees. After the introductory period, the card companies will charge the normal rate of interest on the debt amount. So it is advisable to transfer the debt to another loan or a new card that will help you save the interest money you pay to the loan. At the same time, you should know the APRs on purchases and the cash advance. If the card companies charging more for purchases and cash advance than what is anticipating at the market, you should not consider taking that card.
If you are applying for a credit card for balance transfer, you have to check the fees and other benefits the card companies provide to the users. Most card companies charge no annual fee for the credit card. But they will charge you if you are late in paying the amount you owe for purchases or cash advance. Beside, the card companies offer various benefits like cash back and discount in purchases made with card. So even if you are applying for a credit card for balance transfer, you should know what the benefits and incentives are offered with the card. There are insurance covers in each credit card. Some credit card companies offer travel benefits like concession in air ticket, rebates in hotels, restaurants, etc. So check and understand what they are before applying for the balance transfer credit cards.
The methods of calculating your balance also matter most in your debt and financial transactions. Even if the card is for balance transfer, check the card company's method of calculating the balance. They use various methods to calculate the outstanding balance. The method can make a big difference in the debt you will pay back to the financier. Also get a card that will be accepted everywhere. Some credit cards have tie-ups with other companies and they facilitate purchases and cash advance anywhere in the country. Beside balance transfer, there will be a variety of use you can make with a credit card. So choose a card best suited to your needs along with the balance transfer.
There are hundreds of credit card companies providing balance transfer card. Some top companies are American Express, HSBC, Chase Bank, Discover Financial Services and Citibank of America. Card companies also offer standard credit cards, student credit cards, business credit cards, gas cards, airlines mile card, entertainment cards, store cards. Decide for what purpose you want to have a credit card and then apply as per the need. Bust almost all the credit cards have balance transfer facility but they charge different rate of interest so understand how they charge for balance transfer to go for the one which will serve your purpose.
Before applying for the balance transfer credit card do some research in the website. Understand the terms and conditions of the cards. There are also finance magazines and newspapers where you can get the information on the balance transfer credit cards. The Federal Reserve System also provides information on the credit cards for balance transfer.