Credit Card Balance Transfer: What It Means and How You Benefit
Are you fed up with the increasing debt on your credit card? Don’t want to play catch-up anymore with the horrendous financial charges on your unsettled credit card bills? You may want to consider signing up for a Credit Card Balance Transfer, which can help you to significantly lower the interest you have to pay on your existing credit card balance.
But what does credit card balance transfer mean? It simply means that you transfer an amount of money you owe on your existing credit card to a new credit card account with a new bank.
Benefits of Credit Card Balance Transfer
Lower Interest Rate
Credit Card Balance Transfer systems are encouraged by banks and credit card companies for the purpose of attracting new customers. Therefore, they usually offer much lower interest rates as compared to the interest rates you incur at your existing credit card company and try to lure you with that. Simply put, you’ll be paying less to settle your credit card bills in the long run. Keep in mind, that the effective annual rate on your outstanding credit card balance can reach up to 28% in Singapore, if you fail to pay minimum requirement and missed your payments. However, with Balance Transfer you can lower your interest rate to 2% to 7%, depending on the banks and the different promotions offered.
Interest free Period
A lot of credit card companies offer new Credit Card Balance Transfer customers an initial interest free period. This interest free period can last for a few months, depending on the credit card companies you choose. However, in Singapore it is generally limited to 6 months.
Consolidating Multiple Credit Card Accounts
Especially interesting for those of you who use multiple credit cards is the possibility to consolidate all your existing credit card accounts into one single account. Doing that really increases convenience, as you wouldn’t have to remember the different repayment due dates and clauses of each one of your credit cards anymore, but could simply manage your credit card usage from one consolidated account. That way you can avoid missing any payments in the future.
Managing Your Credit Card Debt
When you decide to use a Credit Card Balance Transfer system you’ll inevitably need to re-examine the state of your credit card account, by seeking the most favourable interest rate and choosing a repayment plan that suits your needs. In case you’re unable to figure out how to repay the balance you’ve accumulated on your credit card, signing up for a Credit Card Balance Transfer may just be the right first step to help you kick-start things.
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