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Save money with credit card balance transfers

It is imperative to make on-time payments of credit card balances to maintain a good credit history. If not in full, at least the minimum dues should be paid off within the one-month grace period to reduce the damage to your credit profile. Although the ideal condition is not to make any purchases for which repayment is a task for you at the end of the month, not making any an average annual rate in fear of falling into several card issuers offer debt when you own a credit card is bad for your scores too.

But, sometimes you may make purchases with your card with a reasonable repayment plan and somehow still fail to pay them off entirely on time due to unforeseen reasons. This can lead to high-interest rates turning a manageable credit card debt into a more massive burden. If you are someone who is juggling to pay off your credit card balances by pushing it with interest amounts on late payments getting accumulated over multiple payment periods, then it would be better to get a low or a 0% introductory period APR credit card. You can transfer your outstanding balances onto another card that has the lower rates of interest. This can be a useful tool if you are trying to ease your burden with lesser interests and thus reducing the overall debts. Not just this, you can at the same time avail financial advantages of making new purchases with the new credit card. There are several factors one might have to consider while choosing a credit card balance transfer option along with the long-term potential of the card after paying off your debts and one that most appropriately fits into your financial situation.

To start off with the basics of balance transfers- you need to know that by deferring your payments, you are not only delaying the principal repayment but also compounding your interests with an average annual rates in the range anywhere between 10 – 30%. Hence, switching from your existing credit card to a new card lets you utilize the benefits of credit card balance transfers to ease your payments and help you to improve your financial condition. There are several card issuers who offer promotional or introductory plans of very low or even 0% interests for the initial months of owning the credit card. So, you should be able to plan your payments correctly so that you can make the most of the limited period offers available on your new card. So, technically with a credit card balance transfer that is thoroughly placed out, you will be able to tackle two problems with one potential solution. One is that of eliminating a compounding interest that can be extremely costly when applied to debts borrowed against an investment or savings. Second is, you can lower your credit utilization wherein you will have no interests adding up to your debts, and you can repay the principal amount thereby clearing or reducing your overall credit balances in an interest-free environment. Additionally, there may be other reasons that grabs you consideration for a credit card balance transfer like consolidation of all your debts into one new card, getting rid of cards that have fees, upgrade of an existing credit card so that you can earn more rewards or add a card that offers better service and amenities over the existing one.

If you are then considering to do a credit card balance transfer, here are a few things that you need to look into.

Review all the possible details linked with each card: Not just a 0% intro rate of APR on the transferred balance, there are other critical factors associated with a transfer as well. Some of them are introductory balance transfer period, balance transfer fee and annual fee. If these aspects are not looked into, then you may still not be able to make any considerable savings with your transfer. The balance transfer fees may be added up which could be hidden from you at the time of opting for the card which will reduce your cost savings advantages. Ensure that the intro offer is always 0%, for a minimum of 12months or more and transfer fees less than 3%.
Keep a check on your credit scores: Qualifying for a credit card completely depends on your credit profile. So, get a free credit report before applying for a particular card and check your qualification, ensure eligibility and then proceed. If you skip this process and apply for a card that is denied for you, this can adversely damage your profile. It is also crucial for you to be mindful of all changes in your credit scores and try to improvise on them as much as possible.
Make a good plan to pay off your debt: try to consolidate your debts from all cards that you own into one. If the total is higher than the limit offered by your new card, then plan the repayment in such a way that you save more on the interest. The cards that have the debts for longer or carry higher interests can be paid off first and then the others in a due order.

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