If you are a credit card holder you have probably received all types of different offers regarding various things including a balance transfer. A lot of the offers that they send your way will seem really good and some of them may even be able to convince you that it is something that will help you out in the long run. The interest rates are low and it is true that these transfers can help you however before you jump the gun and get on board you will want to read this article that tells you basically everything that you could ever need to know.
What are they?
When you receive the offer for a balance transfer you should first look up their definition. This process is when you are taking the debts that you owe for one card and taking it to another card. It can be a card that you already have a line of credit established on or it can be a new one that you may have just opened. Basically, your balance on the old card will be paid by the new company yet you will still be responsible for paying the old balance to the new company.
Does it cost?
The upfront amount that you are going to have to pay depends on the company that you are dealing with due to the fact that each company has different offers available for their potential customers. If you only have a small balance you may end up paying a small percentage of your debt up front or they may have a fixed amount for you to pay. Usually, companies charge around three to five percent yet as we mentioned earlier this is something that varies from company to company. On the other hand with large amounts you may be able to have it capped. If the company does not state directly that they allow the amount to be capped it can be a good thing for you to bring it up.
What you need to know about interest rates
If the interest rate seems to be good to be true more than likely it is which means you need to do a little bit more digging before you agree to sign any type of contract. This is because a lot of companies advertise introductory rates and then they fail to tell you in bold print when they are going to go back to their regular rates as well as what their regular rates are. Lastly, you should know that these card companies can charge you penalties that may go up to thirty percent even if you are just one day late on your payment so this is something that is a good idea to look into as well.
Overall, when you move your debt around it is not the same as if you have paid it off and this is what quite a few of people fail to realize. Transferring can cause you to become even more in debt because your credit may be increased which can be tempting for you to accumulate more debt before you have paid off your priors.
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