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Credit Card Balance Transfers |
In simple terms, the new credit card
pays off the money you owe to the old credit card, so in effect
you now owe the same amount of money to the new card. In order to
make this offer more enticing, credit card companies would usually
offer a grace period in which they charge a lower interest rate
or a balance transfer rate on the transferred balance, making it
easier for you to pay off the total amount. It is not unheard of
to see companies that offer two, one or even zero percent interest
charges on a credit card balance transfer. The grace period would
even take up to six months from the date of the balance transfer.
For a credit card user who knows how to take advantage of this offer,
it is an excellent way of lowering credit card debt as it gives
them the opportunity to pay down the credit card balance without
having to worry about mounting interest charges. With a savvy strategy,
one can actually open a new credit card balance transfer deal with
a new card when the deal with the old credit card expires. And this
can be done indefinitely, transferring from one card to another,
as a way of continually enjoying the benefits of the grace period
given to new transfers so that the credit card debt can be reduced
more swiftly. For those who want to try this strategy though, it
is important that the old credit card is closed immediately because
having two credit cards could have a negative effect on a credit
history. |
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