Making the Most of 0% Balance Transfer Credit Cards

Many individuals choose to take advantage of 0 balance transfer offers with credit cards. Many times, credit cards will provide these offers as an incentive for people to move balances from other credit cards. Here are the basics of this type of offer and how you can make the most of it.

Using 0% Balance Transfers 

Typically, when an individual chooses to open a new credit card, they will be able to take advantage of an introductory offer. Many times, you can get a credit card that offers you 0 percent interest for a certain amount time. Most of the time, you will get at least a year of no interest. Other times, you might get anywhere from 18 months to two years without paying any interest on balance transfers.

Although it can be considered risky, many people use these cards as a method to handle their debt. If you have large credit card balances on several cards, you can open up another card and transfer these balances to it. You will be able to leave the balances on this card and they will not accrue any interest during the promotional period. During this time, you will be able to pay down the balances and save a significant amount of money on interest. Some people will actually continue opening credit cards and transferring balances from one to the other in order to pay down their balances over time.

Avoid Late Payments

If you are using this strategy to pay off your debt, you will want to make sure that you avoid making late payments. If you make a late payment, you will most likely have to pay a late fee to the credit card company. In addition to this, making a late payment can sometimes void the introductory rate. If you do not pay your bill on time, they have the right to change the interest rate to their normal rate. In most cases, this means that the rate will jump from 0 percent to over 20 percent. This represents a significant difference in interest and it could cost you a lot of money. Therefore, you want to do everything that you can to make your payments on time. You might consider setting up an automatic payment program with the credit card company so that you can make sure you will never have a late payment.

Transfer Fees

Although the credit card company might be offering no interest on balance transfers, some of them will charge you a fee for transferring the money. This fee might represent a percentage of the amount that is transferred to the card. Watch out for these fees, as they can add up quickly.

Paying down the Balance

During the promotional period, you will want to make sure that you pay down as much of the credit card balance as possible. This can be a great opportunity for you to eliminate some credit card debt. However, if you do not take advantage of the opportunity, the promotional period will pass you by and you will be stuck paying high interest again.

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