0 Balance Transfer Credit Cards
What You Need to Know about Balance Transfers
The basics:
Credit card balance transfers are a very efficient approach when you want to achieve zero balance credit cards. In this method, the current debt balances you’re your existing credit accounts are consolidated into one and eventually eliminated in a shorter period of time. To avail of these offers, a good credit standing is important.
The benefits:
1. Balance transfers at zero percent interest will give you up to one year to pay for your debts. This covers the amount transferred from the previous cards. However, this will not include the new purchases made.
2. It is more convenient to consolidate the current credit card accounts into one. Tracking down and paying for a single bill is much easier than dealing with several accounts. When it comes to accounting, you will find it simpler to access the transactions that you make.
3. You don’t have to worry about paying for very high interest rates. Take full advantage of the zero percent interest rate during the introductory period to let you pay off the entire debt.
4. If you want to become debt-free, this method will assist you in this endeavor. The monthly payments made will do directly into paying for the primary debt instead of the interest. This will significantly lower down the debt in a shorter period.
So look at the fee for a transfer. Usually around 2.5% – 3% – and then find a high interest saving account that pays higher. You need to spreadh the credit card fee over a longer period than the saving account of course. For example – lets say you had an 18month balance transfer for a 3% fee. Then divide the 3% by 18 and then multiply that figure by 12 to get an annual figure to compare to the savings interest. So in this case it would be 1.99%. The add on what you would pay in tax from your saving account. Eg. 25%. Multiply that by your 1.99 figure. So the calculation would by 1.99 x 1.25 = 2.48. So look for any savings account that pays more than that and you will pocket the difference.