Low Interest Rates With Balance Transfer
Filed under Credit, Lending Money
Most Americans today have some type of credit card debt, and the amount owed on average goes up every year. Unfortunately, many individuals find that the amount they owe on credit cards is much higher than it should be with a certain level of income in play. With the lingering effects of the Great Recession still on the minds of many, it makes sense to investigate different options to reduce interest rates for items like credit cards, mortgages, and traditional loans.
Historically Low Interest Rates To Take Advantage Of
Central Banks around the world are providing lots of liquidity and lowering their interest rates. If corporations, banks and businesses can take advantage of these low interest rates, so can you. Right now is the best time to sign up for balance transfers. The lower the term the better. They can only go up from here.
The most common way to save money on a credit card bill will be through one of two ways:
- Balance Transfer Options
- Negotiating a Lower Interest Rates
Sign Up For A Balance Transfer
A balance transfer option is often the simplest method for reducing credit card bills and the overall amount paid. The credit card company that would be accepting the balance transfer would be making more money from cardholders having a higher card balance.
One caveat to finding a favorable balance transfer option is being able to pay credit cards on time for at least six months to a year is often a prerequisite for being able to transfer successfully funds to a card with a lower interest rate or a favorable introductory period.
Negotiate The Lower Rates
Another method for lowing credit card interest rates and overall payment requirements stems from calling up the credit card company to request a lower interest rate. This isn’t as hard as most people would think, and the process requires nothing more complex than a single phone call and a request for the lower rate.
Credit card companies get requests from customers to reduce interest rates on a frequent basis, and so most have a straightforward and official way to submit applications.
Things to look for when looking at a balance transfer option include:
- Introductory periods with zero percent interest rates
- Lower interest rates than are currently being paid
- Potential credit limit increases due to balance transfer activity
Whether a person decides to save money by transferring a balance or whether they feel a request for a lower interest rate might be a better idea, the amount of interest paid might be lower by anywhere from 5% to 15%. For individuals with significant balances on their credit cards, this could represent hundreds of dollars saved each year on money that would otherwise be paid solely to interest charges.
For example, if a person carried a balance of about $6000 and was burdened with a rate near 30%, his minimum monthly payments could top $170 a month. If that interest rate was lowered to something around 15%, those minimum monthly payments could drop as much as $50 every month, which means that paying that card off sooner would be possible.
Before attempting a balance transfer or trying to get a lower interest rate, it’s a good idea to pay credit cards on time and anything else on time that might impact a credit score. Each month of on-time payments makes it easier to get a substantial reduction on an interest rate.
Credit Card Balance Transfer Loans
A debtor who has several credit cards may be interested in receiving credit card balance transfer loans. Balance transfer loans are advances that are integrated into certain credit cards. The special advances allow a debtor to carry balances from other credit cards onto the new card. Consumers can sometimes eliminate high interest debt by taking advantage of balance transfer loans.
Cards with the balance transfer option are usually available to consumers of varying credit classes. The applicants do not have to have excellent credit. However, most lenders require their applicants to have at least good credit.
Credit Card Balance Transfer Loans vs. Personal Loans
Credit card balance transfer loans vary from other types of loans in several ways. They are different from personal advances because they only allow for the transference of credit card balances. A consumer can use personal loans for any purpose, including paying credit card debt. Although in some instances, credit card companies can offer you personal checks or the ability to sign the check to yourself with the same 0% APR terms.
A balance transfer loan usually offers a period in which the customer does not have to pay any interest rate. A consumer can take advantage of the introductory period and make significant payments on the account. Personal advances usually do not come with this amazing introductory period. However, a personal loan can sometimes be a low fixed rate loan.
Consolidation Loans
Another type of loan that a debtor may request to help with credit card debt is a consolidation loan. A consolidation loan is different from a credit card balance transfer loan in size, interest rate, and terms. A person can use a consolidation loan to pay for any credit item such as mortgage, auto loan, credit card, personal loan, short-term loan, student loan, and the like. Consolidation loans generally have excellent interest rates. However, the interest rates for these types of an advances are usually not as good as the 0 percent introductory rate of many balance transfer loans.
Things to Watch for With Credit Card Balance Transfer Loans
Balance transfer loans can be tricky if the consumer is not careful and he or she does not ask questions. Some balance transfer cards have handling fees. A handle fee or a balance transfer fee is a charge that some lenders incorporate for processing the transfer. This fee can come as quite a surprise to a person who thinks that he or she will not have to pay extra money. The best way to avoid such a surprise is to read terms very carefully and ask questions before signing a credit card agreement.
Debtors should also watch out for the end of the zero percent introductory period. This period can last from 90 days to 18 months. The individual should use this time to make double payments to get the balance down as much as possible. The zero percent introductory period is one of the best benefits of having credit card balance transfer loans. Allowing it to go to waste is not productive.
To apply for credit card balance transfer loan, the debtor needs to complete an application online. Some lenders will give an immediate answer while other may take up to 30 days to respond.