Saturday, March 5, 2011

Balance Transfer Option

Everyone is out shopping in the Christmas season, so it's no wonder that this single holiday brings most retailers 25% of their yearly income. Going by that, it's safe to say that January brings consumers their highest credit card balances of the year. Impulse buying during the holiday season is commonly the culprit, as many parents (along with husbands, wives, and friends) tend to get carried away with buying presents.

It's January and those large Christmas bills are coming in. Having several credit cards with high balances can wrack up your monthly budget, and makes it difficult to buy the things needed for daily life.

Most consumers get those 0% APR credit cards with with balance transferring options to alleviate the post-Christmas woes. This is a good idea, because your payment will be consolidated, making the minimum much lower, and the 0% APR makes the minimum payments even lower.

But it's not just as simple as getting a 0% APR card. Before you impulsively apply for one of these cards, compare all the offers you can get carefully. Read the fine print and get all the details before randomly applying.

How long is the introductory period where there is no interest? Some credit cards offer six months of no interest, while others offer twelve to eighteen. The average tends to be twelve. Along with this, consider how long it will take you to pay the Christmas bills (along with any others). If it will take seven to ten months, then don't apply for credit cards with just the six month period.

What about the balance transfer feature? Some credit cards offer free transfers. But, there are others which charge 3% on top of the transferred amount, which can really hurt if the balances are high.

Not only that, but what about the 0% APR? You can easily assume the 0% applies to all purchases, but this isn't always the case. Some cards do indeed offer 0% APR for everything, while others only apply this to transferred balances.

Read the card details, and find out what the percentage rate is after the introductory period. The 0% APR is great for the first year or so, but after that are you being charged 50% of all purchases? Check to see if this is comparable to competitor credit cards.

Lastly, be sure you can pay the monthly minimums every month on this new credit card. If you are late, even once, the 0% APR feature disappears completely, and you are left paying all the extra APR you were trying to avoid. This could make paying for any high bills even harder.

Getting a 0% APR card can really help you out, during the holiday season or any hard financial times. However, be sure to read the fine print and understand what you are getting yourself into. Otherwise, you'll just be in more financial hot water.

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