Balance Transfer and APR
When you are in debt, you will do anything to get out of it. One of the options to ease the pain is to transfer the balance of a number of cards to one balance transfer credit card. Consolidating the debt means that you only have one monthly payment and not the several you had before.
There are quite a number of balance credit cards to choose from, so it will be necessary to look at what is on offer before you decide which one is right for you.
Many of the cards offer a 0% APR for an extended period, from 20 to 22 months, but the other terms of the cards differ. After the initial 0% APR period the interest rate changes and a normal rate is charged. The 0% APR is also applicable up to a specified maximum amount only.
Nothing is for free and you should take note of the fact that the card issuers charge a transfer fee that can be anything from 2.5% to 3.5%. Many companies offer a partial refund of the transfer fee if the applicant transfers the balance within a specified period of, let`s say 60 days.
This reduces the fee and the refund will go into your account no later than 28 days from the date your balance transfer is operational.
The rate after the 0% period is of importance. Although the first 20 months or so will give you the breathing space you need to reduce the balance as much as you can, you don`t want to be hit with an exorbitant rate after that period. If you think you can pay off your balance within a shorter period, look for a card with a shorter 0% APR period and a lower transfer fee.
Your personal circumstances will be taken into account when you apply for a balance transfer credit card and you will also have to have a good credit score. Many companies require a minimum monthly income for you to qualify for the card.
The rate after the initial 0% APR period ranges from 16.9% to 18.9%. The longer the 0% APR period, i.e. 22 months, the higher the rate after that period.
The cards offer other perks as well. Selected cards also offer 0% on purchases for the first three to six months. Cash back, rewards and discounts apply to a wide range of retail outlets for eating out, travel, hotels and shopping. Every time you use the card at any one of the retailers, you get cash back or rewards.
You can redeem the rewards the next time you buy or you can keep the rewards and use it for a bigger purchase at a later stage. Unfortunately, the reward money cannot be redeemed with online shopping.
Many of the cards also offer the option of managing your card online; this means paperless statements and the ability to track your spending.
The balance credit card is not available to persons under the age of 21.
Shop around for the card that offers you the best deal for your current circumstances. The Tesco credit card is an option when you are considering a balance transfer credit card.
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