If you think that you are the smartest person to benefit from balance transfer credit cards, think again. According to a research published by the Finance Department of University of Pennsylvania, 17% of credit card balances were transferred annually since 2000 by customers seeking some salvation regarding their debt payments.
Some of the benefits of using balance transfer credit card are listed below.
1. Buys You Time to Clear off Your Debts
If you have been irresponsible with your debt payments and you have pathetic credit score, balance transfer credit card can be a bearer of good news for you. It buys you off some interest free time, where you can save money and pay off your previous debt.
2. Helps in Avoiding High Interest Rates
Credit Card balance transfer helps an intelligent customer reduce high interest rates. Companies, in order to get most of the clients, try to bring in the cheapest of the packages. By making a right choice at the right time, you can actually safe a lot of money with the grace period offered. Grace period is the time when the customer is not charged with any interest. It usually lasts within six months to a year.
3. Clears up the Financial Clutter
If you have been using a lot of credit accounts and you have started losing track of them all, balance transfer is the best way. It clears up all the mess and brings all your financial records under one roof. With such flexible and low introductory rates, it is not a bad deal at all.
4. Cleans Credit Record
Who would not avail a chance to cleared credit history? The only way to achieve this is to switch your bank while transferring your balances. However, be careful that the credit bureaus they follow are similar.
Despite having numerous benefits, balance transfer credit cards can be a nuisance for the owner as well. It looks very glamorous in the beginning but gets dirtier after six months. You should feel happy for all the putatively mentioned reasons, but it is important to understand the downsides to avoid them in the long run.
You have to pay a balance transfer fee while transferring your account. They have no cap and can take up any amount as per the companies changing policies. You cannot repeat the transfer. Once done, matter is closed. You have to manage your purchase ratio in order to maintain low interest rate, even during the introductory period. Transferring balance from one to another credit card is a smart move only if you know and practice the limits.