How a Balance Transfer Can Help You Never Pay Interest On Your Credit Card

August 30th, 2010

One of the ways to avoid paying interest is to do a balance transfer. If you have a lot of debt and are paying a lot of interest, balance transfers can save you a lot by way of interest charges.

0% p.a. for 6 months with 2% handling fee

You will be going from a higher interest card to a lower interest or 0% interest card and you will have usually from 6 months to a year to pay off your debt.

However, if you find that it takes longer than the specified time, you can try to transfer your balance again to another card. Those in the credit card business call these customers “credit card tarts.” It’s not the most flattering of terms, but who cares if you’re saving money, right?!

“Should Dos” Versus Reality

Everyone knows that you ‘should’ pay your debts immediately. You also ‘should’ live within your means and avoid going into debt. The reality of life is very different, however. We all know that we ‘should’ do these things but most of us get tangled in building up debt and look for ways out.

If you do a balance transfer to a 0% interest card, you are able to avoid paying interest during the time allotted to you. And, if you have a low interest card, you can still avoid paying interest by paying off your balance within the interest-free period. This can be up to 55 days.

What To Look For

If you want to opt for a balance transfer deal, then you should consider these points:

• Look for the longest offer available. This can be up to one year. You will have to make at least the minimum payment during this time to keep the card active and avoid any penalties
• Keep your credit clean. The only way you will be able to obtain a 0% interest card is through strong credit. If you have poor credit, it will appear on your credit report and the card providers will be less than hesitant in issuing to you.
• There are ramifications. When you transfer your balances around and become a “credit card tart”, it does leave negative marks on your credit report. It does have the possibility of lowering your score in the long run if the behaviour is continuous.

Reminders

When you initiate a balance transfer deal you should make a note of when your introductory period ends. Once it gets close, you may want to switch it over to another card if you haven’t paid your balance down already. Use caution when implementing these tips. However, if you use them wisely, you will be able to pay down your debt quickly.

Editors Choice: Featured Credit Card Deals

	Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Cash Advance Rate (p.a.)
Westpac 55 Day Credit Card	0% for 5 months (reverts to 19.59% )	3.99% for 6 months	$0	21.49%
Citibank Clear Platinum Card	11.99%	2.9% for 12 months	$99	21.74%