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Do you have heavy credit card debt? If so, you can save some big
money by taking advantage of credit card transfers. With balance
transfer credit cards you can take advantage of teaser rates
that are offered several times each year by major credit card
companies. Teaser rates are usually good for three to six months
after you receive the card. Rates can range from 0% to 9% and
they are beneficial to credit card holders who have large debts
on credit cards with higher interest rates. By transferring the
balance from the high interest card to the teaser card, you will
save big money on interest. |
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Be sure to remember that most banks treat transfers identical to
cash advances. Also, the transfer may be subject to daily
interest fees, which can add up quickly and often there is no
grace period where interest isn't charged. The costs of
transferring a large balance in these cases can be astronomical.
Try to choose a teaser card that waives transfer charges for
balance transfers in the initial promotional period.
Always read the fine print when applying for a credit card. Be
aware of the term 'flat balance transfer', which will cost you
fees on all balance transfers. You must be knowledgeable of the
cost of all balance transfers. If you find nothing on the credit
card application, ask a banking representative if there are any
flat balance transfer fees. |
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Take advantage of the credit card grace period. Transfer the
balance on your high interest card to the teaser card before the
payment due date that appears on your bill. Most credit card
companies offer a grace period of between 25 and 30 days. After
the due date, interest is charged on the outstanding balance. If
you transfer the balance before the due date, you will save
money on interest. Some credit card companies offer no grace
period. In this case, you are charged interest from the moment
you charge an item or from the day you transfer your balance. Do
not apply for credit cards that do not offer a grace period.
After you have transferred your balance to the low interest
teaser card, you will receive a bill with a payment due date.
Always pay before the due date and always pay more than the
minimum payment, which is the lowest payment you can make if you
wish to keep your card and your credit history in good standing.
Credit card companies are ecstatic when you only make minimum
payments. Why? Because minimum payments usually pay only the
accrued interest or a portion of it. That means that the
principal remains at the same amount that it was before you made
your payment. This is the way that credit card companies rake in
huge profits. Minimum payments extend the principal amount for
months or years. Each month you pay a minimum payment, it is
taken off the interest. The following month, the credit card
company charges the interest again and you pay it - again and
again and... Well, you get the idea. If you pay only the minimum
payment, it will take years to pay off credit card debt.
Balance transfer credit cards are a good short term strategy,
but don't use it over an extended period of time. Be sure to
check out all options before playing the balance transfer game.
If not, you will find that you have created a financial
nightmare that has no end.
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