These Days There S A Bit More To It When You Compare Credit Cards

Category: Finance, Credit.

One of the most popular types of credit cards over the past few years is the balance transfer credit card.

The original idea was a good one, based on card loyalty and inertia. As consumers in the UK have acquired credit cards in record numbers, the credit card issuing companies have found themselves in the position of having to entice customers to switch cards in order to keep increasing their business. The reasoning was this: get people to switch credit cards by offering them a low interest rate to transfer their current balances from other credit cards. The only problem with the scenario was that all the credit card companies jumped on the balance transfer bandwagon, and before long 0% balance transfer offers were competing with each other for the same customers. Once they d made the switch, they d stay with the new credit card company after the introductory rate was ended, gaining a long term customer for the company. Some consumers saw an opportunity to park their money without paying interest on it, jumping from one 0% balance transfer card to another when the introductory rate ended. Instead, the balance transfer offers have mutated, changing to offer low or no APR on balance transfer amounts, but slipping in protective clauses to prevent the card jumpers from parking amounts just long enough to wait for the next good balance transfer offer.

This might have spelled the end of the 0% balance transfer card- but the credit card companies knew when they had a good thing. If you re considering transferring the outstanding balances on one or more of your cards to a balance transfer credit card, it s more important than ever to compare credit cards before making a decision. The only real difference between offers was the length of time the introductory rate was in force. A few years ago, a 0% balance transfer offer was a 0% balance transfer offer. It was easy to compare credit cards then- how long does the 0% rate last and how much will it cost me when it ends? Here are some points to look for when you re choosing a balance transfer credit card.

These days there s a bit more to it when you compare credit cards. What is the introductory rate and how long does it last? In contrast, many credit card companies now offer introductory APRs from 4% -6% that last for the entire life of the balance transfer. While there are still many 0% balance transfer offers around, the intro rates tend to be far shorter. In other words, if you transfer �500 to one of these cards, you ll have a 4% APR until you pay off the entire �50 What other conditions apply to keeping the introductory rate? To counteract that, many balance transfer offers now require that you make minimum purchases on their card in order to continue to qualify for the low introductory rate.

One thing that the credit card companies didn t figure on was people moving their balances to 0% transfer cards- and not using the cards to charge other purchases. When you compare credit cards, be sure to compare what it will cost you to keep your introductory rate. This becomes important because of the way that your payments will be applied: first to interest charged on other purchases, then to your transferred balance and finally to the purchases that you make with your card. What APRs are charged for other purchases? That means that if you charge a �10 purchase on your card, it will sit there and continue to accrue interest until the entire transferred balance is paid off. If you do this, you ll end up in double the debt. One mistake many people make when they transfer their balances to a low interest card is to start using their other cards again.

If you miss the convenience of paying for your purchases with plastic, you might consider a prepaid credit card, which will give you the convenience and protection of using a credit card without running up your debt. You can compare credit cards and find a good prepaid credit card at comparison websites where you ll find everything you need to make informed decisions about your credit and finances.

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