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4 Questions to Identify the Right Balance Transfer Credit Card For You

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by: No more debt !
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Date: Mon, 25 Jul 2011 Time: 11:01 PM

There is a temptation when you have high-interest debts on one or more credit cards to jump into the first great balance transfer credit card offer you come across. Well, nowadays there are many out there and it will pay to identify the one that best meets your needs. Here are some guidelines about how to do that.

1. Can You Pay Off Your Debt in 6 Months, 12 months, 15 months?

The single biggest factor in choosing the right balance transfer credit card is how quickly you can realistically pay off the balance that you transfer over…bearing in mind the interest rate will be very low or at zero per cent for a limited time only. Often with these cards the rate will revert to the cash advance rate (usually above 20%) after the introductory period low rate ends. So be honest with yourself – don't apply for a card that only has a low rate for 6 months if by your calculations it will probably take nearer 12 months to pay it off, as it may end up costing you more interest than you're paying presently.

2. How Low is the Balance Transfer Rate?

There are plenty of 0 Balance Transfer Credit Cards out there, as well as introductory rates of under 2%, so unless the card is offering something in this region then it will pay to shop around. You'll need to weigh up the rate and the length of the offer combined, to see which one suits you best.

3. Will You Be Making Purchases Too?

This is important. If you intend to make purchases on your balance transfer credit card these will be charged at the APR, not the balance transfer rate, and you will start paying interest on them from day one, regardless of any interest-free period, if your card still holds an unpaid balance transfer amount. It's generally best with these cards to avoid purchases altogether until you have fully paid off the balance transfer amount.

4. Do You Intend to Use the Card After the Balance Transfer Amount is Cleared?

If you choose one of the 0 Balance Transfer Credit Cards but find out that after you pay off the amount you will be charged a high APR with no interest-free period then this make the card far less attractive, if you intend to use it long-term. Some smart people just use the card to pay off the transferred amount and then switch cards (often it has to be with another provider.)

If you are looking to keep and use the card long-term then check that the other features of the card – APR, interest-free period, annual fee, cash advance rate and rewards – are acceptable to you.

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