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What are Zero Balance Transfers?

Aug 17, 2007
Many banks offer zero balance transfers from your old credit card to a new one. Balance transfer for credit cards means transfer of your credit card dues from a high APR card to a low interest or zero interest credit card. In certain cases, balance transfer also involves transfer of funds from a bank loan account to the credit card for a specified period of time. Such loans have a low or 0% interest.

Most people desire a credit card with a low interest rate or APR (Annual percentage rate). However, if you have already taken a credit card with a high APR, you can still enjoy 0% APR by getting a balance transfer. Yes, the competition among credit card issuers and their desire of having more card members have resulted in number of offers where the card issuing companies makes attractive offers for balance transfers. Some of the balance transfer offers are 0% APR on balance transfer, no interest balance transfer or offer for credit balance transfer rewards.

Usually balance transfer is undertaken when there is an outstanding balance on credit cards even after making regular monthly payments. This amount is transferred to another credit card without inviting any interest for the period of offer. Before you avail 0% on balance transfer, keep in mind that you should have at least made the minimum payment due on your credit cards. However you should not make balance transfer a habit if your debt is increasing.

Applying for Balance Transfer

Once you have created an atmosphere of trust with a favorable credit history that you can apply for a no interest balance transfer or balance transfer with 0% APR credit. Normally, you will get a 0% APR on a balance transfer for a maximum period of one year. If you are interested extended duration for 0% APR, you can avail offers such as Chase Platinum Card offering 0% interest up to one and half years. If you maintain good credit and have organized yourself well you can get credit balance transfer rewards moving from one card to the other and closing the account before the lender starts charging higher interest.

Avoid Default Rate

While going in for a no interest balance transfer you must look into the various benefits associated with it. A 0% APR on balance transfer would be the most desirable with a long period of offer. You should also be cautious about any hidden costs and the handling charges attached with the balance transfer offer. However, if you falter on your monthly payments, you will loose the benefit of 0% interest and end up paying a default rate, which is usually a whopping 30%.

Though most of the credit cards will not penalize you for one late payment but if you are not having good track record, then even one late payment will invite the 30% interest. Until and unless there is no interest on the balance transfer it is not advisable to go in for new purchases with a balance transfer card. You can save yourself the trauma of being burdened with 30% interest by going in for automatic payments through your bank.

This is the best way to make the payment. You will save substantial amount of money on interest. You should also make it a habit of getting your credit report for a thorough scrutiny of any mistakes even though you may have been careful of not going into bad debt. With careful planning you could enjoy the benefits of the credit card without loosing your hard earned money in interest paybacks.
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