Planning to consolidate credit cards? How to compare balance transfer offers
Posted January 18th, 2010 and last modified June 21st, 2011Smart people compare balance transfer offers on many different levels. They know that the interest rate is not the sole deciding factor when choosing a credit card. You should understand how to make the best choice for your financial well being.
Anyone who wants to compare balance transfer offers needs to look at more then just the interest rate. While it is true that you want the lowest rate available you also want to make sure that the terms you agree to are fair and reasonable. It is also important to know how these cards work so that you do not wind up in an interest trap. Balance transfers can be a great way to save on interest and pay off your debts as long as you have the fortitude to make it worthwhile.
How to consolidate credit cards with a balance transfer:
- Understand your debt. Get a firm handle on how much money you currently owe and how long it will take you to pay it off. Be realistic about this, remember that you will need money for basics like housing, food, and petrol so do not commit more then you can really afford to spend on your monthly bill.
- Find a card that has a term long enough to suit your need. One of the first things to look at when you compare balance transfer offers is how long the low interest rates lasts. If you know you will need five months to pay off your debt you can weed out all of the deals that are for less.
- Get the lowest rate. Instead of looking at rate first, look at the length of time and then the rate. if you need a year you may not be able to get zero interest. However, if you take zero interest for six months instead of a 1.9% rate for a year once the introductory period ends you might wind up spending more then you would have with the higher rate card.
- Note the other interest rates. Most credit card charge different rates for different transactions. You will have one rate for your balance transfer, another for purchases, and still one more for cash advances. Keep in mind that your payments will go to the cheapest debt first, probably that big balance transfer, meaning any other transactions will gain interest until the balance transfer is paid off. You may want to consider using another card while you pay off the balance transfer or even better, use cash.
- Compare rewards. Some rewards programs can be quite valuable. This should probably not be why you choose a particular card but it can certainly be a tie breaker.
The best way to consolidate credit cards is to find a pay schedule that works for you. If you overextend yourself you will wind up with costly late fees and probably the loss of your introductory rate. You will also have to learn to live on a budget. You can take that skill forward once you are free of credit card debt so you do not wind up in this situation again.
Confused about which balance transfer credit card to go with? Visit our balance transfer credit card guide to see our recommendations
Check out today's featured offers:
| Westpac Low Rate | Citibank Clear Platinum | Qantas AMEX Discovery | ANZ Platinum |
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0% p.a. for 6 months on purchases & balance transfers |
2.9% p.a. for 12 months |
$0 annual fee Up to 10,000 Bonus QFF Points |
0% p.a. for 6 months on purchases & balance transfers |
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