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Friday, 15 June 2012

Zero Balance Transfer Credit Cards

How To Use Zero Balance Transfer Credit Cards Wisely

Many credit cards offer a variety of choices to transfer a balance from another card at zero percent interest for a fixed time. These options can save money, but you need to watch for any hidden charges possible.

The offer of 'free money' is powerful. Years ago it was not impossible to make money from a zero percent credit card balance transfer deal this way: By taking and transferring the money, putting it on deposit to earn interest. Unfortunately, many credit card companies have decided to make changes, making it almost impossible for many people to have money by this way of process. But the zero percent balance transfer deal can still help save a lot of cash, in comparison to carrying the balance on a credit card that pays interest.

For a much-awaited spending, you can get a zero percent loan; at the same time, it also interest-free on purchases credit card. However, the point in this article is what the balance transfer card truly has to offer.

Normally only accessible to new cardholders, the lender takes out a CC and presents a few more cards that they would like to pay down with cash borrowed from the new card. Apparently, if the cards charge eight to twenty percent and the new card offers zero percent interest rate, consider this a great deal. But then, the lender must be on the lookout for numerous tricks and cheats that make a zero percent credit card balance transfer charge more than it offers you.

A handling fee of two to five percent is quite common in zero balance transfer cards. If you borrow a hundred dollars on such card with two percent of its handling fee, in theory, you have to pay $102. The most important thing to remember is this: Always ask to pay the handling fee right away.

Or else, the lender ends up paying the handling fee's standard interest instead, which may be up to twenty percent. Many lenders don't realize that the interest fee only applies on the loan itself. As soon as the fee starts accumulating interest, the only way for you to stop paying this is to repay the whole loan, along with its accrued interest from the handling fee.

Repayments are nearly often applied to pay the balance which basically attracts the lowest interest, to expand the credit card company's profits from the lender.

Handling Fee and the Short Loan Period

An annual loan at 0 percent interest with a handling fee of two percent would seem like a loan at two percent. However, a lot of offers are only for half a year or nine months, making the 'best interest rate' loan five percent or 8 percent, respectively.

Putting Repayments to the 0 Percent Loan Prior to Any Purchase

Many zero percent balance transfer credit cards typically charge purchases at a fixed interest rate which is always high. Sadly, repayments made to the credit card are mostly to get done with the cheapest loan first.

If, for example, you put a $200 purchase on a balance transfer card which carries $1500 at zero percent, and the whole $1500 loan would have to be repaid FIRST before you get to pay off what your loan really was; the purchase apparently continues to accrue interest until the interest-free loan IS actually paid off.

The use of a zero balance transfer cards for any loans is only fit for the well-organized and financially smart. Usually, this type of deal offered by many credit card companies is being offered to new cardholders, and these same cardholders mostly fail to comprehend the math which is always presented as simple, yet complicated once the 'increased' interest rates start to appear in their bills, and leaves them wondering.

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