Maximising Balance Transfers
There was one point in time when I was not able to keep up with my credit card outstanding sums resulting in having a carry-forward amount the following month. The end result is straightforward – there is interest to pay. And a pretty high amount of interest at that. What I did was to utilise a balance transfer process to another credit card.
Many credit cards offer a balance transfer facility whereby you can shift your current outstanding sums / debts from other credit cards to the card which grants you the balance transfer facility. Most of these balance transfer facilities come with an initial low, if not 0%, interest period. So, if you are already paying 18% per annum on your current credit card debt, it would make sense to transfer the whole outstanding amount to another card under the balance transfer programme. This would save you a whole lot of interest payment – provided you do not incur new expenditure on your credit cards.
Before you execute the balance transfer, it would be advisable that you look out for the credit card which provides the best credit offer. Find out how long is the introductory period. The longer, the better. This would provide you adequate breathing room to manage your credit card debt. Find out also whether the special interest rate granted to you is only restricted to the transfer amount or whether it also applies for new purchases. Next, are there fees and charges involved for utilising this balance transfer facility? Some banks charge a one-time administrative fee. Some charge a percentage based on the amount transferred.
Finally, find out whether the amount transferred gives you any other rewards – eg. accumulation of points or rebates.
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