Credit card balance transfer
Golden rule of debt consolidation: Only enter into it if you know that you will be better off in the long run.
What is a credit card balance transfer?
Balance transfer is often a debt consolidation strategy that people take to minimise their monthly payments on their credit card debts by transferring their current balance to an account with a lower interest rate.
Many banks also offer special introductory rate promotions that allow people to pay a lower interest rate than usual for a certain period of time or offer a free transfer of balance.
Things to consider with balance transfers
Always be aware of the fine print. Before rushing in to transferring all of your balances to the credit card that seems the most attractive, you must look at the terms and conditions of the account that they are offering.
Although the new accounts may seem attractive on the surface, they might have a lot of hidden fees. You must take extra care when transferring your balance to an account with an introductory rate, as they may seem a lot cheaper for the first few months, but the long-term rate could be a lot higher than the rate you’re paying now.
There is also the matter of bank fees—is the annual fee higher? How much do they charge for supplementary cards? What is the over limit fee? It may also be worth looking into the support services they provide (and the cost of them) with regards to things like transaction verification, emergency card replacement, and overseas support.
To eliminate the shock and grief you could receive later on down the road, you should have a full understanding of the fees, terms and conditions offered in the new account before transferring all your current balance over, and make sure, above all, that you will be better off after the transfer than you were before.