Balance transfers - what they are and how they could help you save
Balance transfers allow you to move all the money you owe on various credit or store cards to a single account.
If you have debt spread over a number of credit cards, and are paying a higher rate one solution may be to transfer the outstanding balances onto one card, taking advantage of a balance transfer offer.
Many credit card companies offer a grace period of zero percent interest or charge a special low introductory rate of interest in an effort to attract you as a customer. This means that you can typically pay no interest for six months to a year, depending on the deal you go for.
Remember, the point of this is not to increase your overall debt, so at the end of the offer period when the standard balance transfer interest rate is due to take effect you must be prepared to pay the balance in full.
Here are a few pointers on balance transfers:
- Check for any charges or fees, including joining or annual fees. Many companies do not charge a fee for balance transfers
- If there is a fee make sure you are clear on how much you have to pay
- Close your old account as soon as the new credit card is set up
