All About Balance Transfers
What is a balance transfer?
Should I apply for a balance transfer?
It is important to remember that a balance transfer does not mean that the debt has gone away. It just means you are not paying interest on it. You will still have to maintain payments.
This may seem obvious but many people do not get this straight in their mind.
The basic criteria for getting a balance transfer is when you regularly have an outstanding balance after making your monthly payments. This is the amount you should look to transfer to another card. This will mean that for the period of the offer you will pay no interest on the balance (provided you make the minimum payments).
You should be very wary of taking up a balance transfer, if your overall debt is increasing. A balance transfer is not a green light to spend more money. The money you save should be used to decrease your debt.
What should I look for in a balance transfer?
You need to be aware of the following when looking for a balance transfer card
Length of offer period.
Offer Interest Rate.
The zero or low interest rate charged on the balance.
Possible transfers from loans and overdrafts.
On some cards you can transfer from existing loans and overdrafts and still get the offer.
Cut-off period for the balance transfer offer.
Hidden Charges on transfers.
Some banks will charge a handling fee on the balance transfer.
How long the offer is valid for?
There is usually a cut off point from the account opening when the offer is no longer valid. Be very aware of this otherwise you could end up transferring a balance to a higher rate!!
What about new purchases?
What happens when the balance transfer period finishes?
The Golden Rules
There are three things to look out for with a balance transfer card
As mentioned previously, the unsuspecting can get caught out when spending on a balance transfer card.
Maintaining regular payments. If you miss a payment you incur some penalty, so be aware. To be safe set up a direct debit.
The interest rate applied when the offer period finishes.
Good luck with your choice.