Balance Transfer Credit Cards - A Credit Card That Can Save You Money

Balance transfer credit cards are designed to save you money.  By transferring your existing credit card balances to a new card with a lower interest rate, you can save a ton of money.  Credit card companies make money by issuing finance charges to their customers.  The average finance charge rate on most credit cards is about 16% of the unpaid balance. 

With rates this high, it makes it almost impossible to reduce a credit card balance because the finance charge continues to accumulate each month which makes the credit card balance go up rather than down.  The good news is that there is so much competition in the credit card world that companies are competing with each for your business.

Many institutions will lure customers with free balance transfers from their existing credit cards.  There is usually an introductory period with very low interest rates on the transferred balance.  It is common find interest rates as low as 2%.  Some companies may even offer 0% interest during the introductory period.  Introductory periods typically last for about six months and may be for as long as a year. 

For consumers with a good credit rating, balance transfer credit cards can be a great way to reduce their credit card debt.  The introductory low interest period gives the consumer ability to pay off their credit card balance without being charged interest. 

This technique can be a great way to reduce credit card debt for wise consumers.  Balance transfer credit cards give consumers the freedom to pay off all of their accumulated credit card debts.  It is possible for a consumer to be able to open a new credit card account that also has a balance transfer feature when the old credit card expires. 

Then, they can once again transfer all of their unpaid balances on to the new credit card, which like the old credit card, will have a low interest introductory period.  It is important to remember to close the old accounts when new ones are opened.

Using balance transfer credit cards is a smart business decision.  However, it is imperative to read the fine print on all credit card applications to look for hidden charges.  Some banks will change a transfer fee based on a percentage of the dollar amount that is transferred. 

Balance transfer fees should not exceed $75.00, otherwise a consumer could end up spend several hundred dollars to transfer their balance.  Also, be on the lookout for annual fees.  Remember, you are the new customer and the credit card company just received a lot of money from you.