If you use your credit card(s) frequently and are struggling to repay your debt, applying for a balance transfer credit card can help you ease the burden. It may sound counter-intuitive but switching to a balance transfer credit is the best way to reduce your debt significantly. In this article, we will explore the nature of these credit cards and how they can help you.
So what are balance transfer credit cards?
A balance transfer credit card allows you to transfer all outstanding balances from other credit cards and consolidate them on one credit card. They allow you to take advantage of extremely low interest rates, (at times even zero% interest rates), for an introductory period that can range from 3 months to a year, based on the bank’s discretion.
Extremely low interest rates enable you to pay a larger portion of the principle while reducing the interest payable making it easy for you to clear your debt faster. Due the reduced interest rate it might also be easier to club your monthly payments into a single payment, which will result in a more organised financial portfolio.
The resulting benefits of these factors is a reduced payment period as well as a reduced amount that has been repaid to the bank which in turns allows you to save more than you would have otherwise been able to.
Consider the following points before you opt for a balance transfer credit card.
• Compare the interest rates offered on different balance transfer credit cards to find the card that works best for you.
• Read the terms and conditions before applying for a credit card. Often, the introductory interest rate, is applicable only on the balance transferred and not on any new transactions made using your credit card. This means that you will be charged a different interest rate on these transactions. It is wiser to be aware of such caveats beforehand.
• Avoid making additional purchases on your new credit card before you have cleared the outstanding amount owed due to the balance transferred. A balance transfer credit card isn’t your ticket to further expenditure and must be used responsibly.
Click here for a comprehensive list of balance transfer credit cards available in the UAE. You can compare the options available to you in order to find the card most suitable to your needs.
