Balance Transfers - a Guide

The credit card industry is a highly competitive one, and, in light of this, many companies will offer you a variety of excellent deals on facilities such as balance transfers. This will not only gain the company a new client, but will serve your best interests and save you money, too. There are, however, a few things to keep in mind when considering this option.

What is a balance transfer?

A balance transfer is, quite simply, the transference of your balance from one credit card to another. Some cards offer you a time period where no interest is charged on the balance you transfer, and some do the same for any purchases you make.

The pros and cons of transferring your balance

There are numerous benefits to transferring your balance, but there are also a number of disadvantages.

Pros

Obviously, the many interest-free benefits that most cards offer are amongst the main advantages to transferring your balance, and this is particularly attractive if you have a high balance. Interest-free cards also allow you to consolidate your debt, making it easier to pay off, and, if you are able to pay the balance off in the 0% interest period, you could save thousands of pounds each year.

If you don’t mind the bother of constantly changing cards, then transferring your balance again once the interest-free period is over could result in you never paying interest at all, which is another major advantage.

Cons

The main disadvantage of using the balance transfer facility on your credit card is that once the 0% interest period is over, if you still owe money on the balance the interest is usually very high, as much as 15%.

If you are not completely certain that you can pay the balance off in this time frame, or that you are likely to spend larger amounts due to the 0% interest on your purchases, then you should probably avoid this option. Also, many of the best deals apply only to new customers, and call for the debt to be moved within a few months of opening the account.