If you are looking for a new credit card this year, you may well be considering the potential of cards ideal for credit balance transfers. These can be a very useful sort of credit card, particularly if you have an outstanding balance on a current card. Read on to find out how these cards work and some of the key benefits.
What are they?
Balance transfer credit cards can sound confusing but really they’re very straightforward. Let’s say you currently have a credit card with an outstanding balance of £750 on it. That balance is charged at an 18% rate of interest, meaning that by the end of the month, that £750 will be worth £885.
This means you can end up paying a considerable amount of interest, but if you were to get a balance transfer card, you could move that £750 to your new card for a small fee and then pay off the balance at a 0% rate of interest. This means your outstanding balance won’t be growing anymore and you can instead focus on paying it off. Just bear in mind that the 0% period is generally time-limited.
The benefits
This means that one of the key benefits of balance transfer cards is that they can help you reduce the amount of interest you owe and hopefully pay off your balance quicker – especially if you pay back more than just the minimum amount every month.
Also, credit card companies often have more than one balance transfer card, which means there are some good options to choose from. For example, there are combined balance transfer and purchase cards, which give you 0% rates on new purchases as well as the transferred balance.
There are often also other benefits to be had, such as contactless payment technology and online account management, which makes it easier to make payments and keep on top of your new balance transfer credit card.
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