Credit Card Balance Transfers Math

Category: Finance, Credit.

The balance transfer credit card is one of the starkest examples of how competition benefits the end consumer. In simple terms, if you have good credit, companies are looking to provide the offer, even if they do so at a lower rate of interest.

Consumers with good credit and high credit card usage can use balance transfer credit card to save dollars from a few hundred to much more depending on their credit card usage and the amount of balance transfer. You benefit from low interest and they acquire a valuable customer. Credit Card Balance Transfers Math. So, a balance transfer credit card enables you to transfer your existing balance or even debt to a credit card with low or no interest. A look at the math of a credit card balance transfer will make the situation clearer. Now, your interest on credit card debt runs up to, say$ 1450 dollars a year at an average with your credit card that has an APR of 199% assuming you have a good credit rating.

For instance, suppose you apply for balance transfer credit card from a reputed online vendor. Now the competing credit card company offers you a credit card with a 0% introductory APR for the first 12 months. Now that is math that one can live with! By making a simple balance transfer to your new credit card, you save on one year s credit card interest. Shopping Guide To Balance Transfer Credit Cards. The period of 0% APR is important, how much credit do you expect to use, and correspondingly how much interest will you save from credit card balance transfers during the offer. Initially consider the size of the balance transfers to be made, and correspondingly the amount of financial gain that follows.

Do the balance transfers incur a transaction fee and if so how much? And, be sure to, as always read the fine print. Consider how long the introductory APR lasts and the APR after that in your calculations. You don t want to encounter unexpected costs. Balance Transfer Trivia. The best offer sometimes is not the one with the lowest rate of interest. The best type of balance transfer credit cards are the ones with a 0% rate of interest.

It is possible to transfer your debt to a credit card with a 0% APR, and then retransfer it to another one at the end of the introductory APR period on the existing card. Many companies have begun offering such cards, at an incredible introductory period of up to one year. However this is not a recommended action as it can result in a lower credit rating for you. Most companies offer this system of balance transfer. Credit card balance transfers can be done online. Credit Card Balance Transfers In A Nutshell. Before applying for one look, be sure to look at the fine print.

Substantial savings can result if you get you balance transfer credit card arithmetic right. Good financial sense with credit card balance transfers can make for good finances. If you have spent substantially utilizing" plastic" money, a balance transfer credit card just might make good financial sense for you.

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