Credit Card Tips Blog

Credit card balance transfers are available from leading credit card companies looking to take business from the competition and have the card holder open an account with their own credit card company. There are often special offers associated with the switch, and with every new account consumers are given the option to transfer balances from other credit cards. Are balance transfers truly worth it? What terms are associated with the transfer? Before taking advantage of a balance transfer option, it is important to be an informed consumer – here is everything that you need to know about balance transfers:

Watch Out for Fees

A balance transfer is almost never free. There are fees associated with the transfer that are automatically added to the new balance. With most credit card companies, this fee is an even three percent and added on to the balance that is being transferred to determine the balance of the new credit card account. Aside from this fee, watch out for other one-time transferring fees which can cost the consumer up to $49.00. Speak with the credit card company to ensure that these fees are minimal and ask about the chances of waiving the fee before the balance transfer is requested.

Look for Introductory Offers… but Read the Fine Print

Introductory offers are ways that credit card companies lure consumers to their company with the use of a balance transfer. These offers include no interest on balance transfers as well as purchases for periods from twelve to eighteen months. The longer the term, the more beneficial for the consumer as you can have more time to repay the credit card directly to the principal, rather than to the interest the principal has accumulated. However, after the term has been completed, if a balance remains on the card the consumer could be liable for interest rates that were higher than the initial card.

In the fine print of the balance transfer agreement you will often find the following stipulations; monthly payments must be made on time and not missed to ensure that the balance transfer zero percent interest rate remains valid. Missing a payment or being late could mean that you could be charged up to twenty percent interest.

Check Your Repayment Plan

Are you able to realistically repay the balance of the credit card in the time before the introductory offer f the balance transfer expires? If not, than you should avoid the balance transfer. Create a repayment plan and calculate how much money would have to be repaid to ensure that the credit card would be entirely repaid in the term before the balance transfer expires. If you are not able to repay the credit card balance in full, than you should avoid the balance transfer – as it could cost you in the end!

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In today’s world of convenient financing, a good credit score is must as it can affect everything from renting a home to placing a deposit on a vehicle for leasing. However, there are some people that have not established credit or have misused their credit in the past – resulting in a low score. For these people, the option is now available to pay a deposit in return for the privilege of using a credit card in the process of rebuilding the credit rating.

Secured credit cards are those that require some sort of collateral to be placed on the account to secure the line of credit that has been offered to the consumer. Most often, this source of collateral is a cash deposit that is given to the credit card company upon the opening of the account which will be held until the account has been established, or until a new credit card account can be opened when the applicant is approved for a traditional non-secured credit card.

At the end of this term when the card holder decides to close the account or the account has been approved to a non-secured status, the deposit is returned to the card holder. This money is returned in the form of a check or can be applied to the balance of the card – as long as the account and the credit card is in good standing.

Who uses secured credit cards? Secured credit cards are beneficial for those with little, no or less than favorable credit, trying to pump up their credit score. The activity that is on the credit card is reported to the three major reporting agencies on a monthly basis and therefore can affect the credit rating positively when the card is used wisely – in as little as six months. Secured credit cards are available for those who are new to the country and require the use of a credit card to rent a vehicle, a hotel and even place a deposit or shop on the internet.

Of course, this secured credit card often comes with a price. The higher interest rating is often applied to secured credit card – as the card holder is deemed riskier than consumers that are approved for non-secured credit cards. As we have learned, the higher risk a consumer for a credit card company, the higher the credit rating that the consumer is going to be subject to.

Secured credit cards often come with an annual fee for the cost of convenience, especially if the credit card company is offering a lower interest rating. This annual fee may be worthwhile, especially if the consumer is going to carry a balance on the credit card. Therefore, the interest that would be paid through the term of the card is often higher than the annual fee that would be associated with the credit card.

Secured credit cards are an important tool in building the credit rating and can be obtained from a variety of companies. Simply contact the company or visit the website to determine which secured credit cards are available and the terms that are associated with each.

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