By Charlie Brown

Those who have a large amount of debt accumulated on their credit cards and are fed up paying the huge interest costs can search out a new credit card that offers a balance transfer facility at zero percent interest rate. This will give respite for a few months and give time to bring down the outstanding. Some of the more common and vital questions discussed if you are considering switching your dues to a balance transfer card:

How Much Card Debt Do You Need to Transfer?

If you have a lot of money outstanding on one or multiple credit cards, you need to find out if you will qualify to transfer all your dues to one new card. If the amount is really large, you may need to look at several zero percent cards, which may be a cumbersome process. Also, you may discover that the new minimum amount payable on the new card could be higher than what you are currently paying. Most of the cards now insist that you pay at least two percent of your outstanding balance every month and there are many who ask for more. If you end up having to pay more than what you are currently paying, you should be able to budget for it.

Which Balance Transfer Cards Are You Eligible For?

It is not necessary that you will always be eligible for the balance transfer offer.Typically, you are allowed to transfer balances from one card issuer to another but never across cards issued by the same card company. You may discover a really great deal but you need to examine whether it is from the same card company to find out if you qualify at all. In that respect, if your current card debt is spread out on various cards, you will be able to more easily take advantage of the really attractive zero percent balance transfer offers.

Do You Have A Good Credit Score?

Even though credit card companies never disclose their underwriting standards, it is obvious that to get the best card offers, it is important to have a good credit score. It is generally accepted that a FICO score of at least 700 is what most of the credit card issuers look at. Even as you are getting buried in debt across credit cards, it is important not to miss making the minimum payments every month to avoid damaging your credit score that will affect your ability to qualify for the best balance transfer offers. If you do not know your credit score, there are plenty of options online that will let you access your credit report and that too for free; the list includes many of the leading credit card issuers. Make it a point to check out your credit report periodically and report errors if you find any and keep following up till they are corrected to prevent their negative impact from preventing access to the best offers.

How Long Will You Take to Repay Your Card Debt?

Since different credit cards offer different durations of the zero percent interest offer  period, you need to be able to figure out how much time you need to be able to pay back your accumulated balance and choose the card offer accordingly. Most of the card companies offer interest-free periods ranging from 12 to 21 months after which, they will start charging at specified APRs that are likely to be quite high. If you estimate that you require 10 months to repay the debt, you should try and look for cards that offer you at least 12 months zero interest.

What Happens If the Zero Percent Offer Expires and You Still Have Outstanding Debt?

Every balance transfer offer has a limit to the number of months it is valid for and it is very important that you try and repay all your debt before the deal ends. If you are in a situation where you still have an outstanding, there are two courses of action available; the first is to bear the burden of the APR that is applicable to you and the other is to look out again for balance transfer offers to which you can shift your dues. Repaying card debt at the APR charged by your issuer could be very difficult because usually, the interest rate applied to your account will be steep to make up for the concessions given earlier. Of course, the applicable rate will have been disclosed to you after your balance transfer request had been approved and while this could have always changed during the 0% interest period you will have a reasonable indication of its nature. The move again to other zero percent balance transfer cards will have to be considered in the light of the prevailing market conditions at that point in time and whether such offers are available or not. Your credit score on that date will also be an important consideration.

Do I Need to Forgo All Other Credit Card Perks?

When you are bogged down in card debt, the availability of the zero percent interest rate for the longest duration is perhaps the most important consideration. However, you should also examine the balance transfer fees as it can have an impact on your strained finances. Most often the cards that offer you a really long interest-free period will also charge fees that are the highest so if you think that you can repay your outstanding in a shorter period, it may be worthwhile to find a card with a shorter offer period but with less charge. Typically, cash back and reward points do not accrue during the balance transfer offer period but some cards do offer them.

Conclusion

If you have got into a credit card debt trap, you should try and avail of the best zero percent balance transfer as quickly as possible to prevent needless interest outgo. While keeping all the considerations discussed above in mind, it is best if you can control your card use so that you can get your finances back on track.

Leave a Reply

You must be logged in to post a comment.