Transfer Balances To Save Money. If you have high-interest credit card balances, it can be to your financial benefit to transfer them to lower interest cards to save money. And you wouldn't be alone, as most people in the US have more debt than they can manage.
Countless companies offer credit cards with enticing features due to the competitiveness of the credit card market. So, please take advantage of it. Transferring balances is legal, and you can take advantage of it as often as needed. Here's how to go about it.
Consider Teaser Offers - The credit card industry is very competitive, so credit card companies will offer massive discount rates - commonly referred to as teaser rates - to encourage you to transfer balances to them. And although these ‘teaser rates will only last for a certain period, they can still save you a lot of money. These savings can be extended if you often switch to a new card, which has become more accessible due to the power of applying online. Though it may be a hassle, you can save hundreds of dollars simply by switching cards.
Ask For Offer Extensions - There are situations where you don't need to move to another card to get a teaser offer for longer. If you phone and ask, many lenders will extend the preferential rate for longer, as any extra time they can keep you is profitable. But the key here is to ask for what you want because you may never get it if you don't.
Pay Attention to When You Transfer Balances To Save Money - Your card issuers seem not interested in alerting you when your teaser rate is over. So, keep track by yourself; mark it on your calendar, in your day planner, or even set it up as an alert on your cell phone. You can lose time faster than you think, and missing the end of the teaser period by a single day means paying interest at the standard rate...and sometimes even higher.
Pay Attention To The Small Print - It is expected that the ‘low, low rate only lasts a few months, and you might also find that it only applies to balance transfers, not new purchases, an important distinction.
One tactic is for a card to allow you to transfer your balance of thousands at 0% APR while charging you 20% or more for any purchases afterward. An even meaner tactic to avoid is cards that don't let you transfer for a year afterward, thus meaning you spend a good deal of time out of the teaser rate.
How These Actions Affect Your Credit Rating - Moving debt around does affect your credit rating, although it isn't
straightforward. One consequence is that it marks
you as an unprofitable customer, as you will transfer before they can charge
heavy interest. However, it also flags you as someone who takes up offers
quickly. Overall, the more you do it, the fewer reasonable offers you receive, and the
unprofitable-customer effect will eventually prevail.
So, you can use this strategy of transferring balances sparingly; when you do, instead of simply paying lower payments continue making higher payments so that you can pay off the balances faster. And the quicker you do that, the sooner you can get to getting out of debt, saving money, and accumulating money - the ultimate goal of transferring balances to save money.
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