Balance Transfers - Buyer Beware
Below is a MRR and PLR article in category Finance -> subcategory Credit.
Balance Transfers - Buyer Beware
Summary
This article highlights the pitfalls of balance transfers and offers tips on how to avoid them.
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With numerous credit card companies striving for your attention, enticing incentives and rewards have become common, particularly in the realm of balance transfers. While these offers can seem appealing, they may lead to increased debt if not managed carefully.
Many credit cards offer 0% interest on balance transfers. This can be a lifesaver for those burdened with high-interest debt. The process is straightforward: transfer an existing high-interest balance to a card offering 0% interest for a specific period, typically ranging from three to fifteen months.
While 0% balance transfer offers can save hundreds of dollars in interest, they come with potential pitfalls. It's crucial to distinguish between offers of 0% on balance transfers and those offering 0% only on new purchases. Confusing the two could lead to unexpected costs when transferring balances.
Even with a 0% balance transfer offer, purchases made with the new card may incur standard interest rates. For instance, if you transfer a $6,000 balance from a card with a 15% interest rate to a 0% balance transfer card for six months, you save significantly on interest. However, if you then make a purchase and pay $100, that payment applies to your $6,000 balance at 0%, leaving a new purchase at 15% interest.
To maximize benefits, carefully read the fine print to find cards offering 0% on both balance transfers and purchases. Remember, the goal is to clear the debt before the introductory period ends to avoid interest charges. Consider using another card with a low APR for small purchases, reserving the 0% balance transfer card for hefty balances.
By staying informed and strategic, you can effectively manage balance transfers and reduce debt.
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