subject: How to account for credit card balance transfers [print this page] How to account for credit card balance transfers
Look at credit cards in the UK and it's likely that you'll be offered, somewhere along the line, a balance transfer credit card.
That's a reminder, even as you look for a card and hope not to fall into unmanageable debt yourself, that credit card debts can be costly and its a cost that can be solved by other credit cards - a double win for the plastic providers who make cash all the way around this credit roundabout.
Do a credit card comparison and you'll be able to see exactly how that make that cash when it comes to balance transfers.
Accounting for the fees that you're charged when moving a high-interest credit card balance onto a new product has become a major part of accounting for credit card balance transfers. There are more, however, and this article hopes to list them as fully as possible for those looking to get rid of high cost debts in this way.
Fees are one of the most confusing aspects of 0% balance transfer credit cards, though, so let's consider those first.
Fees used to be avoidable but now with pretty much every card you're going to have to pay around 3% on top of your debt.
If you move 3000 to your new card that will mean that you pay 90 in fees.
That amount will be added to your credit card balance and it is vital that it is paid off as soon as possible since some fees can attract interest at a high rate.
More importantly, they should be taken into account when it comes to working out how much you can afford to pay back per month during the period of your zero interest offer.
Making sure that you make all the payments during the zero interest period is very important since most cards have a high interest rate after the time of low interest.
The efficacy of transfer cards declines sharply when consumers have to pay a number of months of interest and, in part, that often happens because of fees.
Note finally that, with a few exceptions, balance transfer offers should be the one aim of one card. That is to say, one card shouldn't be trying to do many jobs, one of which is a balance transfer.
Use abroad credit cards, for example, rarely help to get people out of their debts on other cards.
