Credit Card Balance Transfers: How to Come Out Ahead
One of the common practical forms of debt for large banks is credit card debt. Thus, it shouldn’t be a question of why banks sought after your business. For most people though who hold a massive outstanding balance in their credit cards, a credit card balance transfer is perceived as a lifeline. However, before you decide to pursue balance transfers, it’s a must that you understand the consequences at stake. Understanding whether this can aid or prohibit your financial condition can help you draw a better decision.
Credit Card Balance Transfers
The name itself implies that credit card balance transfer refers to the means of transferring the outstanding balance of one credit card to the other. If you’re holding an outstanding balance in one of your credit cards, why settling your trouble by transferring your debt to the other lender? The answer is, lenders initially grants low introductory interest fees on the event of a balance transfer. Somehow this is a sort of marketing strategy to entice you.
Furthermore, lenders assume upon signing for a credit card, you’ll be drawn in getting other offers such as lines of credit or mortgages. Additionally, if you’re currently paying the typical 19% rate on your credit card, you’d probably knock down your credit card debt. That’s because credit card companies determine your interest through outstanding balance daily. This relates to the fact that paying the minimum each month can take you years to pay it off.
Additionally, some credit card companies allow you to transfer balance for as low as 0%. It sounds a good deal to transfer your existing credit card debt and a breather from carrying massive loads of interest charges.
Taking Advantage of Balance Transfers
If you’re into a transient financial struggle due to employment loss or unexpected medical expenses, balance transfer will help you rack up much of your interest charges. Moreover, while several companies offer insurance protection, it will cost you less when doing a balance transfer as you won’t have to pay the insurance premiums each month.
The Boomerang of Balance Transfers
Well, while reading the pieces of information about credit card balance transfer, you might perceive it as a great option. However, you must be aware that it also comes with a catch. Credit card companies may give you low introductory interest charges, yet mostly during balance transfer, you will be required to pay some fees, which is approximately 1% to 5 % depending on the amount the you are to transfer.
Come Out Ahead Of Credit Card Balance Transfers
The best means to come out ahead in terms of your credit card balance transfer is to settle your outstanding balance prior to the end of your promotional period, which is typically within 6 months.
These can be feasible of your assert in creating a repayment plan and create a budget to save more money to pay off your balance. The key is your commitment towards repaying your debt and making sure that you are in focus to settle your debt. Also, you might try checking if credit card protection insurance is worth for you. Besides, before you apply for any card, it is also a must to know your credit card agreement terms.
CONSUMER PROPOSAL EXAMPLE
Example Unsecured Debts
|2||Credit card 1||$6,812|
Your Monthly Repayments Would Be
a Consumer proposal $748
(total contractual repayments)
a Consumer proposal $295
(total contractual repayments)
* Subject to creditor acceptance
* Payment subject to individual circumstances
* Credit rating may be affected
* Fees apply, subject to individual's circumstances.