0% Balance Transfer – How Can They Offer 0% Balance Transfer Credit Cards And Still Make Money?
Suppose everyone used 0% balance transfer credit cards the ideal way.
They simply transferred an outstanding balance and paid it off completely before the end of the introductory offer or they transferred the balance to another 0% offer when the first one expired.
Could the issuers of 0% balance transfer credit cards still make money?
That’s a great question!
Let’s go over the many different ways they have the ability to make money from consumers.
You may be a little surprised at the information your about to learn.
Introductory Period
This is the most common way for lenders to make money with 0% balance transfer credit cards.
They know that most people will not pay off their debt before the end of the introductory period and in fact many will actually increase their debt.
The enticement of the 0% offer is too great to resist and they use it to justify new spending.
That’s why it’s so important to have a plan and be prepared well before the end of the introductory period so that you don’t get stuck paying a high-interest rate.
Late Payment Fees
You probably think that someone using 0% balance transfer credit cards would always pay on time.
Well, in fact many do not.
So for every payment that is late the credit company will charge a late fee.
Fees can range anywhere from $19 to $39, which can really add up quickly if you always pay late.
Default Interest Rate
In addition to the late fee a late payment can also be grounds to terminate the 0% balance transfer period and begin to charge interest.
Often the default rate is higher than the normal offered rate and applies to both transfers and new purchases.
Annual Fees
And finally some consumers have been charged an annual fee for the exclusive right of holding 0% balance transfer credit cards.
Most annual fees generally are in the range of $15 to $30.
As you can see the lenders have many different money making opportunities with 0% balance transfer credit cards.
Many great offers are out there and new offers are available everyday.
Searching the internet for 0% balance transfer credit cards is a great way to find and compare the best offers that are available today.
0% Credit Cards – Jumping 0% Credit Cards To Get Out Debt
Is the act jumping between 0% credit cards something that should be avoided?
It seems that jumping from one credit card to another has become common practice these days.
The term “jumping” refers to the act of moving your balances between 0% credit cards to take advantage of the interest free introductory rates.
Is it all just a waste of time or is it a worthy consumer practice?
On a worldwide level, consumers have staggering amounts of credit card debt.
In the last five years consumer borrowing has been estimated to have grown by over 50%.
It’s no surprise that many are searching for new methods to alleviate the burden of debt.
It may be that jumping 0% credit cards offer up one possible answer.
The Best Money Saving Method
Those who are carrying large amounts of debt can save a lot money on interest by taking advantage of 0% credit cards.
These 0% interest offer rates only last for a certain period of time usually between 6 to 12 months.
Consumers are occasionally allowed to transfer balances from store credit cards and even outstanding loans in addition to transferring balances from other cards.
Any payments that are made onto 0% credit cards go directly toward paying off only the principal instead of any interest.
This speeds up the amount of time it takes to lower your debt.
The one thing to look out for is a balance transfer fee which is used by the card issuer to deter card jumping.
Strategy for Jumping
• Be organized about managing your debt
• Only do it when trying to clear a large debt
• Be prepared to shop around for the best balance transfer deals
• Be able to make all of your payments on time so you do not do any damage to your credit rating
To get the most benefits from 0% credit cards, be prepared to move from card to card whenever the 0% introductory rate expires.
This involves some organization, but you will save time in the long run by getting gout of debt more quickly.
If you don’t move your debt before the introductory period ends you could find yourself paying a higher interest rate than the one you started off with.
Again you must always pay on time because a late payment could instantly cancel the 0% credit card offer not to mention additional fees.
The Verdict
Jumping 0% credit cards can be an effective tool for quickly reducing your debt, as long as you are not adding any new debt.
Some additional incentives for using balance transfers include rewards points, charitable contributions, travel insurance and air miles.
With the right strategy and a good plan, jumping 0% credit cards can be very useful towards achieving your goal of becoming debt free.
Did you enjoyed this article? If yes, then Share It and Subscribe to our RSS Feed.