0% Balance Transfers – Are 0% Balance Transfers The Perfect Answer?

On the surface, 0% balance transfers are unbelievably luring, particularly whenever you have outstanding debt.

But there are a couple of points you need to understand prior to choosing to use them.

Many consumers appear to get in deep overnight with credit cards.

Apparently broke and deeply in debt, a lot of despairing card holders are perpetually on the lookout for a speedy fix to their credit troubles.

Are 0% balance transfers the perfect answer to this problem? Let’s take a look.

Look Before You Leap

Many urgently jump at such offers without very much caution.

0% balance transfers or purchases may appear attractive even to the most credit worthy individual.

Particularly whenever you have a large outstanding credit card balance (or balances), 0% balance transfers will then become especially beneficial.

And to no surprise, there’s no shortage of these type of balance transfer credit card offers currently available in the market.

Whatever your credit circumstances, you had better use caution and thoroughly understand all aspects of any credit card offer that you look at.

In spite of the apparent attractiveness of 0% balance transfers, it is worth giving a second thought before you switch from your old credit card to a new one.

Companies oftentimes neglect to clarify the small print, concealing those rather displeasing details which may cost you dearly in the long run.

How It Works

Let’s begin with a very ordinary credit scenario.

Imagine having a $10,000 outstanding balance on a credit card with a 10% annual APR, which results in having $1000 in finance charges for a year.

Then imagine securing a credit card that offers you 0% balance transfers for the first 12 months.

By transferring your card balance to a card with a 0% balance transfer offer you would reduce your annual interest payments by $1000.

That’s pretty exciting news.

Do Your Homework

Many people make the mistake of not checking to see what the interest rate would be when the introductory 0% interest period ends.

The interest rate may become significantly greater than that of your existing card.

You’ll want to plan ahead before the 0% interest introductory period comes to an end.

Many consumers may be amazed to learn that when a 0% introductory offer expires that the rate of interest can revert to an interest rate of 20% or more.

Many times consumers are stuck making payments on a high-interest credit card because they did not pay down their transfer balance completely.

So, make sure you plan on paying off your transfer balance before the introductory period expires or you may find yourself looking for another 0% balance transfer offer, which is always an option.

Pointers For 0% Balance Transfers

When considering 0% balance transfers, ask yourself these 4 questions:

- What will the interest rate be when the introductory 0% balance transfer period is complete?

- Is it equal to my current interest rate or will it be much higher?

- What will the net effect be in the long-run because of the difference in interest rates, particularly if I intend on carrying the card balance over time?

- Do I want to get into the habit of switching from one 0% balance transfer offer to another?

In Conclusion

0% balance transfers certainly have advantages and disadvantages, but if you plan on using them to your advantage, make sure that you completely understand the benefits of the card over time.

If you have a rather large debt be prepared to switch cards more than once in order to use the money you save on interest to apply towards your debt.

Do your homework and prepare far in advance so that you don’t get into a situation where you end up paying a higher interest rate than before.

0% balance transfers are a great tool when eliminating your debt provided you carefully plan out your strategy and stick to your plan.

Did you enjoyed this article? If yes, then Share It and Subscribe to our RSS Feed.