How To Use 0 Balance Transfer Credit Cards To Your Advantage
0 balance transfer credit cards can be a great way for those with high credit card balances to get a jump start on their debt relief. But it is important to understand the reasons behind the 0 balance transfer credit cards and how they differ from the traditional credit cards. While both are designed to help you reduce your existing credit card debt, there are some major differences between the two that will have an impact on your ability to pay off your debt. These differences can help you make an informed decision about whether or not the 0 balance transfer credit cards are right for you.
The first major difference between the credit card companies and the 0 balance transfer credit cards is that the credit card companies do not offer any sort of grace period or “soft pause” when you are making a balance transfer. They simply add the new balance immediately and continue to charge your credit card until you make a payment. During the time that you are paying off your balance, you are actually paying interest on the entire credit card debt that you incurred. So, if you were able to use your credit card in a more responsible manner, you may be able to reduce your credit card balance significantly before the introductory rate expires.
Credit card companies understand that many consumers are struggling to make ends meet during these difficult economic times. The 0 balance transfer credit cards are just one way for them to reduce their financial risk and improve their overall financial outlook. By transferring your balances to an introductory offer card, you are essentially giving the credit card company a free pass to charge you higher interest for years to come. Yes, you will have to make monthly payments in order to keep your balance low, but at the same time, you will have no financial responsibility to make a monthly payment. This gives the credit card companies a great opportunity to profit while you are stuck paying out more in interest.
If you are unable to make a monthly payment, you will still have your original credit card balance available to you. As long as you do not exceed the introductory period, you will continue to have access to this line of credit. After the introductory period is ended, your interest rates will return to their normal levels and you will once again be responsible for making payments on your balance. So, as you can see, the 0 balance transfer credit cards are a double edged sword.
Some people feel that they are being rewarded for using the credit cards in the first place, and therefore there is no reason to bother transferring balances to an introductory offer card. However, if you were to stop using your credit card, you would be able to calculate the exact amount of interest that you are paying each month on your credit card balance. This will allow you to determine whether transferring your balances is really a smart idea. This is especially true if you are finding that your current credit card balances are getting too high to pay on a monthly basis.
If you were to stop using your 0 balance transfer credit cards, you would then need to make monthly payments in order to maintain the zero balance. This means that you are likely to be paying interest on the balance and possibly a finance charge as well. If you are still in the situation where you find your credit card has been paid in full but the interest rate has increased significantly, you may not find yourself in a very favorable position when it comes to re-establishing credit.
A 0 balance transfer credit card can be used to your advantage in that you can use the interest savings in order to pay down your debt. You can also use the 0 balance to pay off other debts such as personal loans and student loans, in order to reduce the amount that you owe overall. This allows you to take advantage of 0% interest rates and lower your debt to income ratio.
0 balance transfer credit cards can be a great thing if you are prepared to make the effort and be disciplined. Remember that you will have to make monthly payments until the time that the balance is paid off. As long as you are able to meet the monthly payments, you should find that your credit card can be a valuable source of financial relief. It does require discipline, but it is possible to effectively manage your finances using a credit card.