CreditCardsAct

If you belong to the growing number of Americans who are in credit card debt, this could work for you. Many banks offer a credit card option called a “Balance Transfer.”

What is a credit card balance transfer?

It is a service that lets you open a new credit card that assumes the remaining or total balance from your old credit card. Once the new credit card is opened and your credit card balance has been transferred, the bank now pays your debt off of the old credit card. You now owe debt to the bank that gave you a new credit card. This is new start for you because you can opt for paying installment terms at 0% interest spread out in 12, 24, or 36 months ( subject to the conditions set forth by the bank you’re dealing with). To sweeten the deal, banks sometimes offer bonus points, free items, and free flights just to get your business.

Why would banks assume your old credit card debt?

Make no mistake about it, banks are not doing this because they care about your credit rating or the fact that you can hardly recover from your debt. It’s because it’s big business. Darn straight. People with credit cards get trigger-happy swiping their new card because they are now paying lower monthly fees at 0% interest. Credit card companies and their partner banks entice customers to spend more on other purchases by coming up with promos. When a customer bites, higher interest rates are charged on top of and exclusive of the balance transfer. If you happen to be in the middle of opening a new credit card for the purpose of transferring your balance, you might as well keep your old credit card to keep you from adding up your debts.

Who is eligible for application?

Anyone with a good credit rating can apply for a credit card balance transfer. It’s more your mental state that is at risk here that may make you want to stop and think about it long and hard. Mental State…What? Well, are you an impulsive buyer? A certified shopaholic if you will? Do you forget to pay your bills on time? If you answered all on the affirmative, then you have a problem. You see it may be 0% interest now but it won’t stay that way if you post late payments, default on your payments, and shop more because you feel you have “free” money from the bank. For this to work, you have to rein in your spending habits and pay what’s due on time all the time.

What important “fine print” do you have to know about credit card balance transfers?

- The bank always wins. Even when you declare bankruptcy, you lose. If you aren’t careful with making your payment deadline or proceed opening another credit card with another bank or a credit card company before the 0% interest is up, the bank wins.
- Read the terms and conditions. This is literally the fine print. It’s long, tedious, and boring but if you know your rights (and there are very few allotted to people in debt), you won’t get taken for a ride to destination nowhere. Make sure when it says 0% that it stays that way without excuses from the bank or the credit card company. Some of the guarantees that you want: 0% interest not only on balance transfers but succeeding purchases; and No annual fees. If you want to be debt free, look for these in the terms and conditions.
- Sign only when you are confident about everything. It’s never good to agree to something disadvantageous out of desperation. Debt can do that to you. Baby steps, please. Remember that the bank or the credit card company wants your business. This is a mutual arrangement so sign your name only when you are 100% confident about your decision to partner.

If you stick to the plan and hold a positive attitude, you’ll get out of your debt soon enough.

howtodothings