Good Card For Balance Transfers

Try to use credit cards smartly

The basic premise of credit cards are “buy now, pay later”. Though they are of great convenience when your cash is stretched for purchases, it is the smart use of credit cards that is important for your financial health.

A typical free credit period in India is 45-51 days. If you pay off the dues within this period, the interest is saved. If in case you are unable to pay off the entire amount within the due date, a common practice is rolling over the dues after paying the minimum amount. This could be expensive as you would have to pay an interest of about 3 per cent per month and the new purchases made will not get any interest-free period until the dues are completely settled. So, here’s a quick look over the other schemes offered by card companies to clear off credit card bills. Pointers

It is very important to understand what you are paying and how it works to make sure that you don’t end up paying too much. For example, if you make purchase for `1,000 and opt for a 12 month repayment. The EMI at a monthly reducing balance of 1.5 per cent is `91.68. This means a yearly 18 per cent interest on reducing balance or a flat interest rate of 10 per cent. At the end of this period, you have paid 10 per cent more than the product’s actual price.

Are balance transfers as appealing as they sound? « Credit Card ...

In theory, you have the power to go for credit card balance transfers for as many years as you like. It is however, a temporary solution and must be chosen only by those who know they would be able to make their payments on time, and also possess a good credit rating. Getting a transfer balance spree from one card to another could be harmful. This eventually means that you are moving the same balance every time and not paying it up in completion. A few things that you must consider with credit card balance transfers are mentioned as follows.

You must be wary of your new card spending right from the word go. It is not advisable to spend on the new card, as any new amount incurred on that account wouldn't have the advantages of the initial offer. It will be among the last payments you have to make. In a similar fashion, you should not spend on your old card. When you do so, you have the risk of piling up the same amount of debts. Typically, you must close the old account after you have transferred the balance.

Generally, companies offering balance transfers tempt individuals with low levels of interest in the introductory period. It important to be fully aware of when your introductory period ends and when the new rate becomes applicable. A mouthful of credit card companies does not apply interests for a term of one year. Nevertheless, they try to compensate for this, by charging users a huge amount of transfer fee. So you must look for providers who offer affordable rates.

Scanning through the market carefully will help you to lay hands on the best offers when transferring your credit card balance. While a few credit card companies do not charge any transfer fees, some others may have the user spend up to 3 percent. Irrespective of what the transfer fee is, and how the interest has been applied, it is important to remember that you would still have to make payments on a monthly basis depending on the terms and conditions you signed up for.

Become debt free at the earliest should be your ultimate motive. Hence you must ensure that you are making sincere efforts to pay off as much of the credit as you can. Paying just the minimum monthly amount isn't a good idea at all as that way you would take much longer to have your debts cleared off. You will also have the introductory period run out, which will then bring into the picture, a higher interest rate.