Debts have become a struggle for many households. The COVID-19 pandemic has created a recession that is sweeping across the globe. More and more people are finding themselves with more credit card debt than money in savings.
The reality is that it is taking longer for most people, especially cardholders, to pay their debts. This delay in paying down debts leads to a significant amount of money lost to interest along the way. If you have racked up debt on a high-interest card, what options do you have? There is a simple solution for you: opting for balance transfer credit cards.
This post discusses balance transfers: what they are and how they work. Read on to find out more.
In the simplest terms, a balance transfer is an opportunity for you to transfer debt from one credit card to another credit card, usually with better terms. In most cases, the transfer is from a high-interest credit card to a lower interest credit card. Please remember that this does not help you avoid paying the debt. You will still have to pay the debt.
If you transfer the debt to a lower interest card, the amount of interest you will pay can be reduced. This is, perhaps, the reason why most credit cardholders opt for balance transfers.
Keep in mind that balance transfers are not only limited to credit card debts. With certain credit cards, you can also rollover personal loans and student loans.
A balance transfer can be a good opportunity for you to take control of your debts. This transaction can save you the pain of high and choking interest rates. It can also help you to combine several payments into one card.
Balance transfers are transactions that occur when a cardholder moves all or part of his debt from a credit card to a balance transfer card.
Most balance transfer credit cards come with a 0% interest offer for a limited period. This could save you money on interest payments and use the money to settle your debt faster. You will, however, be charged a fee that is expressed as a percentage of the amount being transferred, and the amount will be added to your balance.
The process of balance transfers varies widely depending on the bank policies and the fine print on your credit card agreement.
Balance transfers have both advantages and disadvantages. If wisely used, balance transfer credit cards will help you pay off your debt in time.
As you read on, this post will discuss both the pros and cons of balance transfers in detail. Thoroughly consider all the pros and cons before deciding on whether to apply for a balance transfer or not.
To makes things easier for you, think about the following before applying for a balance transfer credit card:
Balance transfers come with several advantages, as discussed below:
Despise free lunch. Let’s just say there's no free lunch. Advantageous as they may sound, balance transfers have their potential downside.
In conclusion, balance transfers are the ray of light for those stuck in the dark tunnel of debt. To ensure that you are getting a good deal, pay keen attention to the terms of the balance transfer. If you are eligible for a 0% introductory offer, make sure you pay the outstanding balance during the offer period.