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What basic things should people know about balance transfer cards?

[Thursday, November 25th, 2010]

Most people rely on credit today thus it is not surprising to know that there are several credit card companies making business out of plastic cards. The efficiency brought by credit cards made people rely on credit transactions than cash ones. There might be advantages that credit card use can post over the use of hard money however there are also pitfalls that consumers normally fall for. The use of credit cards in purchasing can actually lead to overspending making people less able to manage their finances. With such reason more and more people are becoming troubled with their debts at the end of the day.

Solving credit problems by opening another credit line might not sound really feasible however for most consumers this has been a common bent. Opening balance transfer cards makes it possible for consumers to move their current balances to another card with ideally lower interest rate than the previous card. The use of balance transfer cards can actually be helpful if consumers know how and when to use them.

The following basic information about balance transfer can be useful.

First consumers should know if there is any introductory interest rate. To get the attention of consumers credit card companies are actually offering interest rates for as low as zero percent. Since the rate is just introductory another thing consumers should know is the duration of such promotion. According to the law guiding credit terms introductory period should at least last for six months.

Therefore most companies offer introductory rates for six months to a year. The longer the period is the more time consumers have to pay their transferred balance.

Second, consumers should know what the exact rate would be after the promotion ends. This is what most people fail to do thus ending up paying more than what they should have been if they did not transfer their balance.

Third it is also important for consumers to know whether the introductory rate is applicable to purchases as well. Several credit card companies have different interest rate for the transferred balance and to purchases. For consumers to really take advantage of transferring balances they should be informed with what type of balance will receive the introductory rate and which will get the regular rate.

Fourth another thing most people miss out is to know first and foremost whether they qualify to the introductory rate or not. Most people think that the rate is for everyone however reality says the otherwise. The credit history will play a major role in determining whether a person can be given the introductory rate or not.

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