credit card balance transfer is the transfer of the balance (the Credit left) in a credit card account to an account at Held Reviews another credit card company . [1]

This process is actively encouraged by almost all credit card issuers as a means to attract new customers. Such an arrangement is attractive to the consumer because the new bank or credit card issuer will offer incentives as incentives or incentives. It is also attractive to the credit card company which uses this process to gain that new customer, and of course detrimental to the prior credit card company.

An order of payments for every credit card. Nearly in all cases payments apply to lowest-rate balances first – highest-rate last (HOWEVER Some countries, like Australia and Germany, [2] require That payments are applied to the highest-rate balances first). Any balance under a teaser rate or fixed rate will be paid off sooner than any purchases or cash advances, which usually have the highest. By avoiding making purchases or taking cash advances altogether, the borrower can ensure they maintain the full benefits of the original balance transfer.

The process is extremely fast and can be done within a few cases. Automated services exist to aid balance transfers. Other similar services do exist, but they may not be free to use.

Decisions on whether or not a card holder decides to transfer one’s credit card

This is the normal on a credit card. The lower this rate, the better for the consumer and the worse for the credit card company. The transferred balance will be subject to the same rate as the card’s purchase rate. Occasionally the same terms will apply as soon as the payment is made. More often than not. Credit card balance transfers involving the transfer of funds from a high credit card or a credit card to a credit card.

It is a very good value for money. It is a lure for catching new customers. With an extra low initial rate, transferring customers have lower than normal which ultimately means lower initial monthly outflows of money to the credit card company. The 0% rate is the most common when a new credit card is opened.

This teaser rate is temporary. The duration of teaser rates vary from (typically) 6 to 15 months, after which the remaining transfer is subject to purchase rate. Teaser rates in the UK can often be in North America, with (typically) 6 to 35 months available for UK balance transfers. Failure to ensure the account is current. Customers should pay attention to the length of time of the opening offer, since it is a sudden increase in rates. This increase in the credit card company’s method of making extra profits to make up the losses of charging the lower introductory rate. Of course, this can be countered by switching to another credit card company.

A low rate that is fixed until the transfer is paid in full. This type of offer is usually guaranteed to be available (see Teaser rate). Whilst this is a great way to get the most out of your money. (Typically, it may be between one-half and two-thirds of a fixed rate, fixed term personal loan)

Transaction fee

A transaction fee is a commission earned by the credit card company earning one’s business and is a direct transfer of money from the user to the credit card company. This varies from (typically) 1-5% of transferred debt – sometimes with a maximum capped amount, but otherwise an uncapped percentage.

Because transferring to new credit cards often results in lowered rates, one can repeatedly make use of this process to save a lot of money over the years. The idea is to switch to a new credit card. There is a caveat : the credit card contract may include a clause preventing the credit card holder from transferring the balance to a second time within a certain period of time. There may also be ways of extending the teaser rate or preventing it from disappearing prematurely. This method is often advocated by personal finance self-help sources.

To determine this type of behavior, many credit card issuers have stopped offering no fee balance transfers. Additionally, under pressure from various Federal agencies, [3] card issuers have minimum payment requirements to ensure cardholders actually pay off their balances. These changes have made it attractive to carry debt, despite any promotional APR that may be included in the offers.

References

  1. Jump up^ E. Thomas Garman; Raymond Forgue (2009). Personal Finance . South-Western College Pub . p. 196. ISBN  978-1-4390-3902-1 .
  2. Jump up^ Section 366 (2) of the German Civil Code (Bürgerliches Gesetzbuch – BGB).
  3. Jump up^ Fowles, Deborah. “Your Monthly Credit Card Minimum Payments May Double” . Financial Planning . About.com . Retrieved 22 March 2012 . Under pressure from the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision, Closer to 4% more than the current average of around 2%. Some major banks have already increased to a minimum.