Credit Card Balance Transfers – Are They Worth the Effort

Have you been wondering lately if transferring your balance from one credit card to another might be a good idea? Let us look closer at credit card balance transfers …

In order to adequately manage your credit card debt there is a few things that you can do. One thing that is very popular among credit card owners is to do a credit card balance transfer. What this means is that you transfer the existing balance on your credit card onto a new credit card that you have applied for. In most cases this is done because the new credit card has something to offer that the old card does not such as an introductory period with no interest for a specified duration of time. This means that the debt you owe will not grow larger in that time period.

This sounds like a very attractive option but the question is- are these balance transfers really worth the effort?  Credit card balance transfers have good points as well as bad points. To determine if this is a smart method for you it is important to review the positive side to these transfers as well as the drawbacks connected to them.

The Up Side of Credit Card Balance Transfers

Looking at it from a short-term basis credit card balance transfers are a smart way to manage debt (if you find that managing by other means is difficult for you). Deals that allow you to transfer a balance from one credit card make it such that you do not have to worry about paying interest for a time and this means that you should find it easier to pay off your debt faster. It can also affect your level of spending and can make you a more responsible credit card user overall.

You may decide to transfer your balance to a new credit card as a means of delaying paying the majority of your debt while at the same time not having to worry about it growing bigger. If you have a great deal of other things in your life that need to be paid right away then this delay can lighten your financial load and provide you with more  peace of mind. If you take this route with your credit card you must realize however that minimum payments are still necessary to keep your account in good standing. You will run into a serious problem if you stop making payments all together.

As long as you know when to make your payments towards your debt and how you will go about the repayment then the balance transfer can work in your favor. Create a payment plan for yourself that works for you.  If you just try to pay your debt willy nilly then this will get you into trouble and a balance transfer is probably not a good idea for you. Otherwise it is.

The Down Side of Credit Card Balance Transfers

Before you decide to do a balance transfer you need to be aware that this is not meant to be a long-term solution for managing credit card debt. The debt will not go away until you pay it off but as a long-term method it is not a good choice.

You do not want to be burdened by this debt for a lengthy span of time and you do not want to keep transferring the balance from one credit card to another because you do not want to have to pay it off. As soon as you have transferred the balance from one card to another you need to start focussing on how you are going to repay the debt. You cannot simply keep delaying the inevitable. You have to pay off your debt whether you do a credit card balance transfer or not!

There is a chance that you will not be approved for a new card and therefore will not be able to make a balance transfer. If this is the case then you will be left with a debt that keeps accumulating interest. You will therefore need to come up with a suitable repayment plan even quicker to avoid your debt getting worse.

Even on balance transfer credit cards that offer an introductory period there is often a one-time fee of the balance that must be paid up front. It is likely to be something like two to three percent of the total balance. In the short-term this can be very expensive. If you plan to transfer your balance more than once then this cost can really add up.

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