The article tells consumers about some facts and myths about balance transfers on credit cards.
There are some facts and myths about balance transfer credit cards that need to be set straight. Getting a handle on these facts and myths will help you better manage your money.
Myth: I can go to jail if I keep moving my credit card balances around.
You can legally move your credit card balances around as often as you want. As long as you make your payments and don't try to cheat your lender, the law doesn't care how you handle your money. But it's not a good idea to keep moving your balance transfer credit card from one card to another. This is because you need to open up several credit card accounts in order to do this. When it comes to your credit score, having a lot of open accounts can hurt you.
There is something called "revolving credit" that is used by credit cards. This credit is not like something like a car payment, which is paid back over time. If you have too much revolving credit, you are in the high-risk group. The basic idea behind this is that it would be too easy to get a lot of revolving credit, use it all up, and then not pay back what you owe. Using balance transfer credit cards to combine bills is a good idea, but it shouldn't be something you do all the time.
Myth: The best credit cards for transferring a balance have an APR of 0%.
Even though the best balance transfer credit cards should have an APR of 0%, that's not the only thing to think about when choosing the best card. First, you should find out more about this unique APR. Do you have to transfer the balance at the time you apply for the card to get the 0% APR, or is there a window of time during which you can make the transfer? Does the 0% APR last as long as the balance transfer, or will it go up to a higher-than-average APR in a few months? Does the balance transfer credit card have any other perks, like travel insurance or protection against fraud? Does the card have a low APR for purchases as well, or is it best to only use it for balance transfers?
Myth: Transferring balances on credit cards is the best way to get out of debt.
Even though balance transfer credit cards can help you get a handle on your debt, you shouldn't use them as your main way to get out of debt. Instead, you should think of the balance transfer credit card as one of the tools you can use to help you get out of debt. You can put all of your credit cards with high interest rates onto one balance transfer credit card and pay less in interest fees. It also makes it easier to keep track of your debts and bills, since you'll only be making payments to one credit card. Still, getting out of debt takes responsibility, hard work, and good planning. Getting a balance transfer credit card is not enough.
Myth: It's hard to find credit cards that let you transfer a balance.
A lot of people think it's hard to find a good balance transfer credit card, but that's not true. To get people to sign up for their cards, many credit card companies offer special rates for the first few months. After all, the more money you transfer to their card, the more money they could make from the finance charges you have to pay. In fact, you might be able to turn a card you already have into a balance transfer credit card by calling the credit card company and asking if they would be willing to give you a special deal. To keep you as a customer, many companies will waive fees and cut interest rates.
