Think of Balance Transfers as a Must Win Game

There are few possibilities available for people with revolving balances on their credit cards that can match that of 0% interest on balance transfers. The credit card industry essentially lends users free cash for long periods of time and lenders must ensure that they are making profits as well as providing a service. Interest expenses can become very costly for consumers, who can end up paying a fortune, which can exceed $1,000 within a year, if they are big spenders.  Such a cost can be attributed to excessive rates which sometimes exceed 20%. The frequency of such high costs really make balance transfer offers even more enticing.

Interest free

Some financial institutions offer interest free credit cards, but the interest free status is only valid during the introductory period, which is designed to entice users to spend more and accrue a greater balance on the card. If consumers do build up a greater balance,  the lender will earn more money from interest expenses.  The free credit for introductory period can be very helpful, however, especially when users are reducing their expenditures and cutting costs. Misusing the card during this period it is not a good idea.

Amongst the best balance transfer cards currently on the market is the Low Rate MasterCard, which offers a 55 day interest free period for retail purchases, providing enough time to make necessary adjustments in paying off the card balance.

The card, which also offers a 2.9% p.a interest rate for a six-month introductory period, allows borrowers to transfer any unpaid balances and save some money from going to interest payments.

Meeting the cut

Individuals with very good credit qualify for the 0% offers, although caution must be applied before entering into the deal. Those with a serious plan to pay off the debt within the grace period are more suited for the card. Others, who fall outside of this bracket, will be entering a dangerous game which will not pay off, since such offers will only persuade them that they have more money to spend.

Things card users should consider:

Their opponent: Credit card companies have been in the game longer than the borrower. They can almost be said to try to make the borrower default and lose the grace period. Care must, therefore, be exercised.

Apply vigilance: Even with a clean credit card history, the offer is not a guarantee. It is upon the holder to ensure that the offer holds when the balance is displayed.

The Truth: Offers on both balance transfers and purchases are true 0% offers. Some companies require one to square the balance transfer amount first, with the interest charges on subsequent purchases remaining higher.

Adequate scrutiny: The card’s other features, such as cash back plans and fraud liability coverage are also vital to the user. But, the important thing for the borrower is to ensure that they arrange a card with low fees. With $45 and $85 annual fees for the Silver and Gold tiers, the Low Rate MasterCard offers more competitive rates than many existing cards in Australia.

Never show up late to a battle: Penalty fees and unwanted rates are the price paid for late payment. Automatic bill payments are a sure way of holding onto the offer, in addition to making payments above the minimum monthly payments.

Remember Integrity: Borrowers should note the expiry date of the deal and create a two-month back up. If it is likely for a particular customer to default, they should shop around for anther offer. Caution must be exercised, since one’s credit history can be damaged.