Facts About 0% Balance Transfer Credit Cards

A 0% Balance Transfer Credit Card usually refers to a credit card that offers a new user or new cardholder a 0% interest rate for the first six to twelve months after first using the card. Usually, the 0% interest rate is a "teaser" rate that is used to persuade people to use or avail a certain credit card.

This comes after a credit card holder transfers balances from one or more unpaid credit cards to the current card. Then the creditor has to pay for those debts using the new card. Issuers like banks, generally charge balance transfer fees to reimburse the costs they incurred in handling the transfer of the unpaid debt to the current credit card account.

To take advantage of the 0% interest rate that this type of credit card offers, a cardholder must try to transfer debt balances to his current card, then paying for them as quickly as possible. Issuers of this type of card typically offer 0% interest rates on periodical payments for up to twelve months after first using this credit card.

1. Some card issuers disallow the transfer of debt balances from high interest accounts to this type of card during the introductory 0% interest rate offer period. 3. If you incur a late payment for even a single payment period, several issuers automatically charge cardholders with very high penalties. What's worse, they could immediately revoke the 0% interest rate privilege and change your card to a variable annual percentage rate (APR) card just for one late payment.

4. Issuers may charge the credit card holder very high interest rates right after the introductory offer period expires. 1. Do not apply for this card if you are going to transfer small amounts or a zero balance debt for a previous account. 2. Make sure you choose a credit limit that suits your needs and at the same time complements your current financial status. The issuer conducts credit investigations to determine your ability to pay and the credit limit that you can handle. 3. Understand the long-term details of credit.

Make sure that you can handle the interest rate and rigidity of the payment scheme after the introductory 0% interest rate period. 4. Quickly pay for the balances during the introductory 0% interest period. If you are going to take advantage of the 0% interest rate, make sure that you can pay for the balances during the introductory period. This is especially needed whenever a credit card holder transfers a balance from a previously high interest card.

5. Do not transfer large balances to your 0% credit card if you cannot pay for them before the end of introductory period. Failure to pay for the balance would result in the cardholder having a much larger amount to pay for compared to the original balance he wanted to eliminate. Make sure you understand the costs you will have to incur and deal with using your new 0% balance transfer credit card. Read the fine print in the card's credit terms to make sure you will not get into financial trouble.

Now, there are some fees obviously, but the fees are generally quite affordable. There are generally two types of APR offers. Firstly, you may be offered an APR (annual percentage rate), meaning you will have the same rate for the entirety of the time you are keeping the funds. Secondly, you may be offered an introductory APR card, meaning it will only be for a certain allotted time (usually between 3 and 15 months). For those who have the choice of two credit options, many will immediately go with the lower offer.

Although, one should look at more than solely that. One needs to look at what interest rate they will have preceding the introductory period. Sure, the lowest rate may save you money for the first while, but it may not save you money in the long run. Always look for the best offer for the long run.

There are still many of benefits of a 0% APR Credit Card. For those who know they will pay of their line of credit in a timely manner (furthermore, quickly), in the introductory period, switching is a great option. What could be better than borrowing money with no charge at all, If your current credit card has a very high interest rate, you can save quite a lot by changing to a 0% APR Credit Card. Though, be sure that the given rate will apply to your current balance that is being transferred.

To get most out of balance transfer credit card strategies here is something you may want to put into practice today. When credit card companies issue 0 APR cards and you transfer the balance, that balance (which was previously costing you money in interest charges) is now interest free (for a while).

However, all the repayments you are making to your new card only serve to pay off the 0 APR portion of the debt. If you actually use the new card for purchases or to get cash that will attract interest, and that portion is not paid off by your monthly installments.



This is a sneaky way for the banks to make more money by only letting you reduce the 0 interest debt, not the 15% interest debt or whatever it is - you'll find this in the small print. There are two ways to avoid this issue. The first is not to make any goods purchases or draw cash at all with the card after you've made the balance transfer. You must treat this card solely as a card for handling your transferred balance - you should literally not use it for anything else.