Credit Card Guide
What is a Credit Card Balance Transfer?
Trying to figure out what a credit card balance transfer is can be a difficult task especially for those that are unaware of financial terminology. In laymen terminology, a balance transfer would be seen as transferring money into or out of your credit card correct? Well in actual fact that is not the case. We are going to take a look at credit cards in more detail to be able to understand the nature and purpose behind what exactly credit card balance transfers are. A credit card is like a short term loan that allows you to make purchases of products and services by borrowing money. The amount of money that you can borrow on a credit card is known as your credit limit which is set for a monthly basis. How much you choose to spend is solely your choice, keeping in mind that you can not go over the given limit and that you will be expected to repay the money back.
When you initially apply for a credit card, it can be quite difficult to get one approved due to a low or no credit history rating at all. In such circumstances, many individuals end up applying for a credit card that is not as popular in the financial market such as through a supermarket store or gas station. Even though these credit cards can still be used, the amount of interest that you would be expected to pay on them is usually quite high. Most of these credit card plans start off with low interest rates to attract customers to apply, however their proper interest rates that come into act after the introductory period usually off set any benefit that you initially achieved. In such cases, many people tend to find themselves with a large amount of outstanding debt which they are expected to pay with high rates of interest.
This is where people start looking for credit cards being offered by reputable financial lending companies that offer reasonable long term interest rates. Upon a successful application, what one can simply do is that they can transfer the outstanding credit card balance from one account to the other. Once the process has been completed, what it basically means is that you no longer owe the first credit card money seeing as you have transferred the owing amount to another credit card.
A credit card balance transfer can be free in some cases but not always all. Most credit card companies usually require you to pay a fee for credit card balance transfers. In such a case, it is important to calculate whether or not transferring the balance in the first place is something that will really help you save money in the long term. Seeing as there are usually a large number of lengthy calculations involved in such a process, it would be a good idea to get a financial advisor involved. They will be able to spell out everything that you need to know in simple plain English, rather than complicated numbers.
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