What are the benefits of transferring credit card balances to new credit cards?
Answers:
it was very easy to find credit cards which allowed to transfer balances without any fee what so ever. These credit cards came with 0% intro APR for a specified period like 6, 12, or 15 months. This was used as a goldmine by those with large outstanding balances. They would simply transfer their balances to such credit card and get rid of existing high APR's. The 0% intro offer would then be exploited by them. Just by paying the minimum balances they would stay in the good books of credit card companies, and when the 'golden period' of0% intro APR was nearing its end, voila they shifted their huge balances to another credit card with similar offer.
So, this resulted in loss of revenue for credit card companies in terms of interest rates, but a more disastrous consequence of this process was that the credit card holder was increasingly getting into huge debts.
A major issuer of such no fee balance transfer credit cards, Morgan Stanley with their range of Discover credit cards, took strong exception and withdrew all such offers. Now they decided to take a certain percentage on balance transfers. To counteract such measure the credit card companies now have a different APR for balance transfer, this includes credit card with 0% intro APR.
You make the credit card companies happy by giving them your money.
You keep spending and keep chinese industry going.
Benefits for you - few.
6+ months interest free - but watch out for the transfer fee (usually a couple of %)
you don't have to pay your min. payments you can just move the $ around and screw yr credit all up :)
The normal advantage is to get a reduced interest rate for a period of time.
The big thing is to be VERY CAREFUL. If you transfer your balance to new cards, don't keep using the old cards, and run up more and more debt, and get yourself in too deep.
The only advantage would be if it's a lower interest rate but be careful because some cards charge a cash advance fee on transferring balances. If you do transfer your balance then be sure not to charge up the card you just transferred from or you'll end up further in debt.
some of them can be intrest free for 6 maybe 12 months,
You get to lower your interest rate but it is a bad Idea unless you close your old card. What most people do after paying off their loans is to use the cards over again.You have to be disciplined. The real way to get out of debt is to pay off your smaller cards first and then use the money that you were using to [pay off the next highest and So on. Cutting up credit cards as you gou go. The only things you should ever buy on credit are houses and cars.
The only card that it is worth transferring a balance to is the More card. They do not charge a balance transfer fee and they offer an interest rate of 5.9%. However, you do need to have a very good credit rating.
interest free periods. although you do get charged a handling fee and you will pay interest on that, which can be a pain if, like barclaycard) there is a minimum amount of interest they charge. I put 900 as a balance transfer on one of their cards, the handling fee was 22.50 and the interest on that should be less than 0.50 a month, but because they charge minimum £1 ive been paying over the odds. I complained and got it refunded, although now i have put some purchases on there I will be paying more than £1 anyway.
The disadvantage is you haven't gotten rid of the debt, you've just moved it.
The disadvantage is many people move debt to another credit card then charge up the first card.
The advantage may be a short term reduction in interest rate. The disadvantage is you end up paying longer and more.
The biggest advantage to transferring balances-- is you can save a ton of money. Depending on how BIG your balance is, you could save hundreds of dollars in interest charges by switching to a 0% APR credit card. Although you'll probably have to pay a 'balance transfer fee' of 2%-3%, it can be easily made up in your savings on interest. You can find a complete list here:
http://www.asapcreditcard.com/0-apr.html...
Just keep in mind, the 0% intro doesn't last forever! At some point, you'll have to pay interest on your balances (and new charges). Make sure you don't get yourself in too deep by making new purchases you can't afford.
Hope this helps. GOOD LUCK!
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