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Is transferring credit card balances a good thing?

[Monday, November 15th, 2010]

One of the most common options routed by most people when caught in the situation when paying credit balances tends to be impossible considering the sky-high interest rates of their credit card companies is getting another credit.

This is commonly called as balance transfer. Whether it is a good thing or not actually depends on the situation.

If you are suffering from your current credit card company primarily because of their expensive rates and other fees, the availability of balance transfer make it possible for you to transfer your debts to another account provided by a company who can offer better rates and lesser fees for you. In this case it is a good thing.

By having your debts consolidated into a single account makes things easier for you to manage. Transferring your debts from different cards to just one credit card (given that it has enough credit limits to take hold of all the debts you have) will lessen the hassle of managing multiple accounts. If you are a person who tends to forget things even as important as paying your credit card bills, balance transfer is a good thing for you.

It can be not so good if your credit score is low. This is because the balance transfers are made advantageous for consumers if they can qualify to the introductory rate offered. This interest rate can be as low as zero percent and this is the meatiest part of all the balance transfer catch. However not all people can be given the highly discounted rate for there are certain qualifications that applicants must possess. The qualification is primarily all about the person`s credit worthiness. An excellent credit score will definitely help a person land into the introductory rate offered.

If not for the introductory rate, balance transfer may not be a good idea for consumers. Considering that there are more fees that can be appropriated to consumers when they transfer balances the process can be more expensive than not transferring balances at all.

Another way that balance transfer may be a disadvantage for consumers is when a person transferring his/her debt has too much debt when consolidated. This way a credit card account with high credit limit might be necessitated by the situation. If the credit limit goes far more than 30 percent chances are doing a balance transfer will just end up influencing once credit score in a negative manner.

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