Debt and Balance
What is a balance transfer?
A balance transfer is the process of moving an unpaid credit card balance to another credit card, usually to take advantage of a lower interest rate. There is nothing wrong with doing this; credit card companies often encourage it. They get a new customer (you) and you get a nice low rate – for a while. Win-Win? Possibly. If you can plan ahead and pay off the debt before the great low rate ends, you win. If you carry a balance – even a little one – you are often saddled with a very high APR; maybe worse than the one you started with.
Often, credit card companies offer teaser rates, or introductory rates as ways to bring new credit customers in. An introductory APR is often quite low or even 0% on a good balance transfer credit card. If it all sounds too good to be true, it might be. You are limited to the amount of available credit on the balance transfer card, and the credit card company decides just how much that amount will be.
Be sure you understand what the balance transfer fees are for your new credit card. They can often be quite high, and might wipe out a considerable amount of what you are saving by moving to the new credit card.
See also:
What is a balance transfer credit card?
What is the difference between a variable APR and fixed APR?
How do I do a balance transfer?
What is a balance transfer check?
Last update: 2006-09-25 18:35
Author: BKO
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