May 12, 2005

We have all heard of balance transfers, unless you have had your head stuck in the sand for the last couple of years, as banks and credit card issuers have been using the trees of a small rain forest, for leaflets and letters with all they’re promotions, running a steady stream through our letter boxes, but do we truly understand what they are and how they can be of a benefit to us.

So what is a Balance Transfer?
A balance transfer is where you can take the debt from one credit card and pass it on to another credit card, that will be offering you a lower interest charge than the old card, though in many cases right now you can save the interest completely on the balance transferred, as many credit card issuers have given us a incentive of 0% on balance transfers from 3 months to up to a full year, to entice us of our custom. So looking for a credit card with the lowest APR possible, which holds a balance transfer facility, will be of a great benefit.

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Balance transfers can be put to great use if you are trying to reduce your debts, if you can get a card with the balance transfer facility and it is offering you the chance of an interest free of a period of 6-12 months, then by switching to this credit card you will save a small fortune in interest charges that you can put back into reducing the debt that you owe, though there is one detail that you should never forget, DO NOT use the credit card to make any purchases, only use it to reduce your debt not add to it.

If you do decide to use a balance transfer facility and when you get to the end of the interest free period or special introductory rate, you find that you have not been able to pay of the balance, this is where making sure that you have got the best and lowest APR available to you kicks in, meaning that you will still be saving money with this credit card, rather than sticking to your previous piece of plastic.

To sum up....

So really that is a balance transfer in a nutshell, by moving your debt from one credit card that is racking up interest to a credit card that is giving you the offer of a balance transfer facility, that is giving you a better rate of interest and in a lot of instances, a 0% interest free period to start with.