If you are considering combining your outstanding credit card balances into one place, you might be curious about the best way to benefit from a low introductory rate. The switch to a 0% APR card is not a difficult one, but you should have a plan in place to maximize your savings and pay down your principle debt.
Simple Steps
Even though it is a fairly easy process to consolidate into a 0% APR card, there are a few simple steps to ensure you don't get burned in the process. First, if your goal is to make headway on your balances, find a card that has a 0% APR. Most balance transfer cards come with a 12 month 0% APR grace period. Others, instead of granting a grace period, will have one lower than average APR from the get go. The advantage to this second type of card is that you keep that low rate, whereas a typical 0% APR card will ramp up to a rate that is a little more common. The point of getting a 0% APR card is not to just give you immediate relief from interest payments. It is to give yourself an opportunity to pay down that debt without the added burden of paying the credit card executives? salaries. So, when you get this opportunity don't fritter it away; even if you don't pay-off your entire balance, your interest payments after the grace period will be greatly reduced if you make some progress.
Feel the Power?
?the willpower, that is. You can do wonders for your credit score and financial situation if you use your 0% APR card with discretion. However, if you make late payments, or only small payments while adding to the overall balance, then you could easily get yourself into trouble. The worst possible credit-card-induced feeling is to have a big balance creep up on you, and to realize higher interest rates are coming along for the ride. The single biggest pitfall to avoid is the temptation to sit on your 0% interest, and spend your money elsewhere. Take advantage of the opportunity and you'll find yourself on sounder footing.
Have a Plan
The best way to go about this transition is to have a well thought out plan. You can approach this opportunity any number of ways; your personal financial situation should dictate your needs. It might sound trite, but studies show that those who formulate a well thought out plan before embarking on a new endeavor are much more likely to succeed. Sitting down and thinking about your goals, whether that be partial payment of the balance or payment in full, will help you create a more stable financial picture. You really can maximize this opportunity!
Copyright 2006 Edward Vegliante
If you have a large balance on a high interest credit card, then a balance transfer card might be the one for you. Balance transfer cards have low or 0% APR rates which allow you to continue paying off the balance without accumulating as much in interest charges. Here are five tips to help you choose the right balance transfer card for you:
1. Consider your credit needs and habits. Do you tend to pay off balances quickly, or pay just the minimum each month? Do you plan on using this card for new purchases or only for the balance transfer? Are you looking for extra features? Knowing your answers to these sorts of questions can help you evaluate different cards and choose the one that is the best fit for you.
2. Consider which card features are most important to you. Are you determined to find a 0% APR deal for your balance transfer, or are you more concerned with finding a rate that will stay low long term? Do you need a low purchase amount APR as well as a low balance transfer APR?
3. Compare several cards to find the best one. You have a lot of possible options for a balance transfer card, including cards with 0% APR or low APR introductory rates, cards with low fixed rates, and cards with low variable rates. Look at several different cards, and consider what all of the details of their terms mean for you.
4. Don't lose sight of what's important to you. Once you start looking at all the different options available, it is easy to get distracted by special deals and rewards. Decide which factors are most important to you at the beginning of your search and stay focused on only those cards that meet your minimum requirements.
5. Check several sources of information. The Federal Reserve publishes a survey of credit card terms every six months, and there are a wide range of websites on the Internet that will let you compare credit card offers and even apply online.
Both Edward Vegliante & Beth Derkowitz are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
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