What's the use of balance transfer credit cards? After all, just moving your balance to another credit card doesn't affect the amount that you owe – or does it? In truth, there are a number of benefits to consolidating your credit card debts using these type of cards.
- Reduce your interest rate
The higher the rate of interest (APR) that you pay, the more you'll end up paying back on your account, and the longer it will take you to pay off your credit cards and get out of debt. Even a small drop in interest can make a difference if your balance is a large one. - Simplify your accounts
Are you paying off several cards each month at varying rates of interest? When you transfer all the balances to one low interest or 0% interest rate, you'll find that you're paying out considerably less each month
Even making a balance transfer from one credit card can greatly simplify your accounting records. Most card issuers apply differing rates of interest to different types of purchases. If you're carrying a balance on your current credit card that is a combination of cash advances, balance transfers and new purchases, you could be paying it off at as many as four different interest rates. That makes it very difficult to keep track of how your accounts add up. By moving your entire balance to one of the 0% balance transfer offers, you'll stop the interest from mounting up on what you owe so that your payments actually affect your balance.
It's important to compare balance transfer credit cards before applying to be certain that you're getting the best possible deal available at the moment. Rates and deals change so often in this competitive market that you're likely to find something that suits you and saves you money. In their efforts to stop the rate tarts – those who shift their balances from card to another to avoid paying interest at all – many card companies have put new conditions on their balance transfer offers. Be certain that you understand the terms, and that you add up all the costs of transferring your balances before you make the jump from one credit card to another.
