What Makes A Great Balance Transfer Credit Card?

By Author: John Matthew
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If you’re drowning in high-interest debt on a credit card or a number of cards one way out of the mire is to consolidate your debt onto a new card that's offering a low rate of interest so that you have the breathing space to pay off the debt without it getting much larger.

There are plenty of balance transfer credit card offers on the table out there – how do you choose one that will work for you?

Find One with the Right Pay-Back Period

The period you will be offered at the introductory rate will usually vary from 6 months to 15 months. You need to calculate what's possible for you…how soon you can repay the debt at the new low interest rate; then choose a card that matches.

Don't choose a 0% card for 6 months if you cannot repay the debt in FULL within 6 months, as the rate will likely rocket to the cash advance rate after the introductory period expires and you may be left paying interest at above what you were paying before.

Find One with a Low Rate

A low or even 0% balance transfer rate is clearly preferable to avoid your debt ...
... getting any larger while you attempt to pay it back. Balance this feature with a suitable pay-back period and find a card that matches your ability to make repayments.

Know what Happens when the Low Rate Expires

It's important to check what the introductory rate reverts to after expiry. Is it the cash advance rate, the APR or another rate? It's common sense that if you are looking to use the card long term then you need to have an indication of what the long-term rates are going to be.

Don’t Spend!

Most balance transfer credit card deals will advertise the low rate but you may have to read the small print to find the purchase rate. The golden rule with these cards is don’t spend at all. Any interest free period doesn’t apply while you have an unpaid balance transfer sitting there and any repayments you make will go towards paying the transferred amount off rather than new purchases, so the new purchases attract high interest from day one and for a potentially long period.

Check All Fees and Charges

Check the small print so that you know all fees and charges before committing to your balance transfer credit card. Most Australian cards will waive an initial fee to make the transfer but you should double-check this.
For more information regarding balance transfer credit card offers, balance transfer credit cards and credit card comparison, please visit: www.lowerbills.com.au