Pennywise
Balance Transfers
by: Sahil | last updated: November 10, 2009
Category: Standard Credit Cards | Tags: Balance transfers, balance of account transfers, BOAT
Category: Standard Credit Cards | Tags: Balance transfers, balance of account transfers, BOAT
Balance transfers or Balance of account transfers are made available by many credit card companies in order to increase their customer base and successfully compete in the market. A balance transfer refers to a transfer of an amount from one credit card to another. This is because the credit card to which the balance is being transferred offers a lower rate of interest compared to the other card.
Simply put, balance transfers are using a low interest credit card or a zero interest rate transfer to pay off an owing amount on another card. The advantage for the consumer is apparent since the interest that he or she pays is lower than the interest on the previous card. The credit card company also makes use of these transfers to increase their customers and encourage brand loyalty.
Balance transfers can really be efficient and beneficial for consumers if handled in a wise manner. Many companies provide an interest free grace period for those who switch form some other brand to theirs. Consumers can actually make profits using Balance transfers by taking out the complete remaining amount for the interest free period and putting it in a bank account until the expiration date of the grace period arrives. The interest can be pocketed and the balance returned to the credit card account.
Balance transfers are an excellent method of reducing credit card debts and if you think that the interest on your card is becoming too much you can opt for this type of transfer. However the transfer must be from one credit card Company to another company since transfer of funds internally in the same credit card company but to a different card does not count as a balance transfer.
For example if your balance on a certain high end card is $100 and the interest rate is 23% then some credit card company may offer you an interest free period of six months if you transfer the balance to their credit card. Many people are not aware of the various offers of balance transfers and fail to benefit from it due to crass ignorance. Asking around and contacting other credit card companies for better offers are always a good idea.
Using this approach, an individual could potentially open a fresh account that tenders a balance transfer when the old one terminates. Then transfer the entire of the balance to the fresh card to start an original grace period of low or absent finance charges. If you prepare to do a balance transfer, make sure that you close your previous account.
Using balance of account transfers is a brilliant practice, however conscientiousness is necessary. From time to time there is fine print attached with concealed charges. A number of banks might charge a transfer fee that can be a proportion of the balance transferred. Be sure that there is a limit on the amount, or else a balance transfer in the thousands may end up costing a couple hundred dollars. Also, be sure the bank doesn't charge a lofty yearly fee, or joining fee. The credit card companies are by now getting your business, so don't let them get the better of you in a balance transfer.
Related Guides
Credit Cards: Cash Advance
A cash advance is nothing but hard cash taken out of an ATM machine using a credit card and a PIN…
Credit Card Types
There are numerous types of credit cards and choosing the right one usually depends on a person&r…
Bank Credit Cards
A bank credit card is one which is issued by a bank. The card can access various funding assets, …
Cash Back Credit Cards
Cash back credit cards are those that provide a percentage of the amount spent back to the consum…
Types Of Credit Scores
A credit score is usually a three digit number that determines the creditworthiness of a person. …
Guide Discussion & Comments
blog comments powered by Disqus
Hi there,I am Sahil
I hope you like this guide and benefit from it.
Add me as a friend to track changes to this guide as well as my new guides.
Like this guide?
Stats
64 views
0 star rating
0 Other guides by Sahil
Corporate Credit
Corporate credit is the acquisition of funds or other services either from a vendor directly or from a lender with a promise of repayment at a later date. Co…
Credit Squeeze
A credit squeeze is a term in economics where two factors occur at the same time to stifle the supply of credit. Usually during credit squeeze interest rates…
Cash Credit
Cash credit is the issuance of a short term cash loan to a business entity. A cash loan of this type if frequently made use of to meet the expenses related t…
Credit Counseling
Credit counseling is a broad term that offers education to customers about how to avoid debts that cannot be repaid. Credit counseling can be paradoxically d…
Visa
Visa Inc. which is commonly referred to as VISA (Visa International Service Association) is a multinational corporation based in California, USA. The company…
