Balance transfers can be an important tool in the process of credit card debt repayment, especially when rising interest rates seem to increase the monthly payment substantially. Aside from a lower payment and more of the payment being allocated towards the principal, rather than to increasing interest rates – there are many benefits to taking advantages of balance transfers to get rid of credit card debt, these benefits are:
- Taking advantage of balance transfers can assist in repaying credit card debt quicker than trying to repay a credit card that has an interest rate upwards of ten, fifteen and even twenty percent. Balance transfers allow more money to be paid to the principal, rather than interest
- Many balance transfer accounts can be used to fund large purchases as the payments are often interest free for purchases, as well as balance transfers throughout the twelve to eighteen months that the balance transfer is taken advantage of
- In some cases, the balance transfer fees are reduced, or even avoided if the consumer is eligible for certain introductory offers to offset these costs. Considering that most balance transfer fees are 3% of the balance being transferred, this can save up to one hundred dollars, depending on the credit card balance
- Balance transfers can help to preserve the credit rating as they can enable the consumer to repay the debt quicker. In some cases, the credit limit which is offered is higher than that of the existing credit card and therefore can create a lower balance to credit limit ratio, which can have positive effects on the credit rating.
Tags: balance transfer, credit cards