Wednesday, 25 February 2015

How to use a balance transfer card wisely?

Balance transfer cards are cards that offer very low or zero interest rates. If you have high-interest debts to pay like loans, credit cards then you can opt for a balance transfer card to save money on the high interest rates.  You can transfer your due balance to a balance transfer card with a low or zero interest rate and pay off the balance without worrying about the interests piling up. But to get approved for a balance transfer card, you need to have a good credit score. A good CIBIL score also helps to get the balance transfer deals. But you should also know that balance transfer cards have an expiry period ranging from 3 months to a year.

So how should one use a balance transfer card wisely? 

Your main aim should be paying off that balance before the low interest rates for the balance transfer card expires and interests start piling up again. Don’t transfer a balance if you are not sure of paying off the debt before your low interest rate expires. Transferring a balance when you are not sure about paying it does more hurt than help because in the end you’ll be stuck with a bigger interest rate than the one in last account, once your low interest rate expires.  You would lose money than what you were thinking of saving while transferring the card. Make sure you understand all the terms of the cards before you make a transfer. Try to get the lowest fees & interest rates and the longest period of time.

Balance transfer card don’t make the balances go away- they optimize your debt by making it less expensive for a limited period to help you pay it off. So follow these steps and use your balance transfer card wisely!

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