Balance Transfer Credit Cards

Are you confused by the different credit cards on the market? If you’ve just looked over the comparison table of the many different credit cards available you are probably wondering what makes them different. Here we are going to discuss what balance transfer credit cards are and the pros and cons of these credit cards. Balance transfer cards are the most sought after products on the market.

This type of card allows you to take a balance from one credit card and move it to the balance transfer card. That’s the simple way to say it. There are, however, other distinctions that should be made. Most credit cards will allow you to make a balance transfer. Those that are in the comparison tables as balance transfer credit cards have special options that go with them. We would call these special options the pros of the balance transfer card.

Pros of Balance Transfer Credit Cards:

Interest free period
Reduce debt
Inexpensive borrowing
Unsecured debt

Let’s take a look at each of these pros. Most balance transfer cards offer a period where you are not paying interest on the balance you have transferred. The amount of time you receive an interest free period is up to the credit card issuer. Typically the balance transfer zero percent rate is six months to sixteen months long.

You can transfer more than one balance to the credit card. For example, if you have three credit cards and transfer the balances of all three credit cards to a new card or one of the three cards you have reduced the debt owed. How this works is due to one interest payment versus three interest payments. Of course, you usually pick a card with an interest free period as well. This leads to inexpensive borrowing. Lastly the debt is unsecured, which means you have no collateral on the line.

Cons of Balance Transfer Credit Cards:

New Lines of Credit
Bad Credit Rating
Transfer Fee
Introductory Rate Ends

As you can see there are about the same amount of cons as there are pros. To get the introductory rate you usually have to open a new account, which means you have to go with a new credit card company to get the new line of credit. The introductory rate will end eventually, and unless you pay the card off before that happens it can be expensive.

All balance transfer credit cards charge a fee between 2.5 and 3 percent. Occasionally you can find a credit card that will waive this fee. The downside to getting the fee waived is that you usually have to have good or excellent credit scores. Anything lower and the deal is not available to you. This takes us to the last con of bad credit rating. If you already have a bad credit rating you may find the credit card companies are unwilling to give you a new card or give you the balance transfer introductory rate.