Credit cards are a great way to buy goods or pay for services if used wisely. Usually, the credit line that will be granted to a customer is based on their credit history and their capacity to pay, based on the financial documents that are usually required to be submitted to the credit card company during the application process.
If a person tends to overspend, most likely the credit card owner will be stuck paying high interest rates and penalties in addition to the principal amount borrowed. The easiest and quickest solution to get out of paying high interest rates with your existing credit card is to do a balance transfer with a new credit card.
A balance transfer is when a customer with an existing credit card transfers their balance from their existing credit card to a new card, usually to enjoy a lower or even no interest rates. The balance transfer usually has a certain amount of time like six (6) months or one year, depending upon the terms of the balance transfer with the new credit card company.
The balance that was transferred through the balance transfer procedure needs to have been paid in full during the agreed upon time. If not, the customer will end up paying an interest rate against the unpaid balance which can be the same or even higher than the regular interest rate that the credit card charges.
Customers can choose to transfer the entire credit card balance or just a part of the balance through the new credit card company’s balance transfer process. Customers also have the option to close their old credit card after the balance transfer process is completed or keep it for other purchasing needs.
Balance transfers are usually a way of credit card companies to entice customers into switching from another card to theirs by offering low or even no interest rates. In this way, the customer also benefits because the old balance from the old card is considered paid and doesn’t affect their credit score.
When a customer does a balance transfer, there may be some one time transfer costs involved, depending on the terms of the new credit card. The best way to make sure that your balance transfer is successful is to make sure that the monthly payments are made monthly and are made on time, which means that the bank receives the payment on or before the due date. This is because if the new credit card company does not receive the customer’s payment on time, they will probably charge an interest rate on the unsettled balance and the customer will also most likely pay late fees and other fines associated with missing a payment.