subject: Getting Credit Card Debt Under Control With A Balance Transfer Credit Card [print this page] It seems that no matter how hard you try to avoid it, your credit card debt continues to climb. Whether it's because prices are on the rise or you simply overspend is irrelevant. Every time the card bill comes it looks the same and you never seem the make any headway on paying it off.
However, there is a solution and that is the balance transfer credit card. The latter is a card that offers a promotional low interest rate for a set period of time for any debt you transfer from another credit card that does not belong to the same card issuer. There are plenty of offers available ranging from 0% to 9%, depending on the financial institution issuing the card. You will find that if the balance transfer credit card comes with other benefits, such as a rewards program or a low purchase interest rate, the promotional balance transfer rate tends to be slightly higher.
So, if you have outstanding card debt on which you are paying a higher rate you will be able to transfer it to your new balance transfer credit card and pay a much lower rate. This will allow you to pay off your debt much faster and save money on interest costs as well.
However, most balance transfer credit cards offers come with a stipulation that the promotional rate is only valid for a certain period of time, ranging from six to eighteen months. Once this period is up, the balance transfer rate will revert to either the purchase or cash advance rate. Therefore, you will need to make sure that you focus on paying off your outstanding debt as soon as possible.
If not, you might find yourself in the unpleasant situation of actually paying a higher interest rate than you were on your old card. You will often find that the best balance transfer credit card offers come with higher purchase and cash advance rates, with the expressed purpose of tempting you to change to a different card provider. The idea is to make the balance transfer rate so tempting that you forget to analyze the rest of the offer and charge full steam ahead without taking into consideration whether or not you can pay off your debt within the allotted time.
Remember that lenders aren't charitable institutions and they need to make a profit. The main source of revenue for a lender is from interest costs and penalty fees, meaning that the more customers they have the more money they make. Therefore, their goal is to attract as many new clients as possible, which they achieve with highly tempting offers. However, appearances can be deceiving, which is why you need to make sure you read all of the fine print before signing on the dotted line.
On the other hand, the fact that the offer is available for a limited time can also be beneficial because it will force you to focus on paying off all of your debt faster. The fact that most of the repayment will be going towards covering the capital rather than interest costs is another benefit that will make it easier for you to get your debt under control.
Balance transfer credit cards are highly effective in helping you to get your debt under control. As long as you read the fine print and use your new card wisely, you will be able to pay off all of your existing debt and save a lot of money in interest costs.
