Article: July
22 2007
To get most out
of balance transfer credit card strategies here is something you may
want to put into practice today.
When credit card
companies issue 0 APR cards and you transfer the balance, that balance
(which was previously costing you money in interest charges) is now
interest free (for a while). However, all the repayments you are making
to your new card only serve to pay off the 0 APR portion of the debt.
If you actually use the new card for purchases or to get cash that
will attract interest, and that portion is not paid off by your monthly
installments. This is a sneaky way for the banks to make more money
by only letting you reduce the 0 interest debt, not the 15% interest
debt or whatever it is - you'll find this in the small print.
There are two
ways to avoid this issue. The first is not to make any goods purchases
or draw cash at all with the card after you've made the balance transfer.
You must treat this card solely as a card for handling your transferred
balance - you should literally not use it for anything else. This
may be difficult though, because it means you can't actually use the
card when you want to and as you have been used to!
An alternative
approach would be to use two cards. One would be the card with the
0 APR transfer rate and the other would be another card with a 0 APR
or low APR, or even a rewards program. It would work like this:
1. First choose
your zero-percent card and make sure that there are no hidden charges
or annual fees.
2. Transfer your
old balance to this new card and try to pay as much of this balance
off per month as you can. Remember this balance now attracts no interest
for the number of months stated by the issuer of this particular card
- but it still has to be paid off! If you can't pay off the entire
balance, you can always transfer the balance again to another card
when the time comes (at the end of the 0 APR period), so remember
to transfer your balance as that time approaches.
3. Find a second
credit card that you can use in the normal way for purchases, etc.
You might even want a card with a cashback rewards system of some
sort. You certainly want a card with a low APR rate or even a 0 APR
rate on purchases as well as cash.
By doing this
you've established a good debt management program for yourself. You've
taken a big sum of money, moved it to a 0 APR card, and set up a repayment
plan. You also have a second card which means you'll be able to carry
on as normal. Do bear in mind, though, that you do need to stick to
the repayment plan you've decided is best for you.
Gordon Goodfellow's credit card sites automatically tell you when
your 0 interest period is up, so that you can transfer your balance
to a fresh card, saving you interest charges. U.S. residents can make
use of the service at http://www.best-balance-transfer-credit-card-deals.com
and the U.K. site is http://www.best-balance-transfer-credit-card-deals.co.uk
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