0 Balance Transfer Cards, What are they and How do they Work?

0 Balance Transfer Cards, What are they and How do they Work?
by Daniel Major


0 balance transfer cards are extremely popular as they offer a means to
actually save money by simply transferring your credit card balance or
balances, to the credit card provider making the offer, well at least for
a period of time anyway.

If you take into consideration the current state of the economy, it is
somewhat surprising that the number of people who have large credit card
balances increases year on year and this trend shows no sign of slowing
down in the future. Unfortunately, many of these people are paying high
interest repayments for the privilege of having this debt so it is
understandable that 0 balance transfer cards are highly sought after. If
you listen to the statistics often cited by the media and political
figures the average APR of a US credit card is around 15 percent and the
average debt for a US credit card holder is $8000. This figure is very
misleading as most US households probably owe 25 percent or less of this
figure; a more realistic statement would be to say 5 percent of credit
card users have credit debt of $8000 or greater which is a far more
accurate assessment of this situation.

5 percent of credit card holders still adds-up to a large number of
people that have a high combined credit card balance all of whom would
benefit greatly from the use of 0 balance transfer cards.

Although emphasis is generally placed upon the size of a debt it must be
stated that the size of a debt is irrespective; $1000 of debt is as
difficult to deal with for someone with no money as $10000 of debt is and
as a result the benefits of zero interest balance transfer credit cards
are there for all to use.

How do 0 balance transfer cards work?

Quite simply, credit card companies need customers in order to make money
therefore, to entice new customers from their competitors; they offer 0
percent interest balance transfer deals. These deals usually run for a
fixed period of time, usually between 6 to 18 months and offer zero
interest on balances that are transferred over from other cards, and may
even cover purchases made during the same period.

The removal of the interest element of the repayment benefits the card
user as monthly interest makes up quite a large chunk of the monthly
repayment saving the user a considerable amount of money for the period
of the deal.

If it seems too good to be true it usually is, 0 balance transfer cards
are no exception.

Obviously, credit card companies are in business to make profit and for
them to totally eliminate their 'pot of gold' would be nothing short of
business suicide so there are certain methods they use to make money.

The first method of recouping some lost revenue is by charging for the
balance transfer. Usually, a charge of 3 percent for the balance to be
transferred is incurred. If you are transferring a large amount you
should be cautious as 3 percent could be a substantial amount of money
although many companies do put a cap or a ceiling on this charge. It is
advisable, therefore, that before signing up for any deal, that this is
checked out properly.

Another method that is used is to impose a very high APR upon purchases,
in this situation it may be wise to have a secondary card that is
designed to benefit the shoppers amongst us and use this solely for that
purpose, this will avoid any unpleasant hikes in your bills.

Conclusion

0 balance transfer cards are a fantastic way to reduce your monthly
outgoings for a fixed period of time but it is also advisable to maintain
the same levels of repayments that were made before the transfer
therefore reducing your debt quicker.

Always check the terms of the card, an ideal card deal will run for at
least 12 months, have few costs for the transfer process, apply to
purchases made during the offer period and have an OK APR when the deal
is over which is very important.

Unfortunately, these deals are generally only available to people with a
good credit history so check before applying.

And finally; credit card companies have become wise to the 'card jumper'.
When these deals first began many people used to jump from one card
issuer to the next and as a result card issuers were losing out on
revenue left, right and center.

Your credit history is scrutinized for the tell-tale patterns of this
type of behavior and you will be declined more often than approved if you
are seen to be jumping, which doesn't do your credit score any good, so
make sure you sign up for a good deal.






Finding good 0 balance transfer cards that offer a deal is one of the
best steps towards gaining control over your finances but for a method of
debt elimination that has a more long term effect in the battle against
debt visit www.creditcardconsolidationloanssite.com
here you will find
links to information about methods of debt elimination so good that they
could have you debt free in as little as three years.
www.debtconsolidationinformationonline.com

Contact the Author
Daniel Major
More Details about 0 balance transfer cards
here.