Balance Transfer

Balance Transfer – Explained

A credit card balance transfer is the transfer of the balance (the money owed) in a credit card account to an account held at another credit card company. A balance transfer occurs when a credit card customer transfers the outstanding debt from one credit card to a new credit card. This is logically done from a credit card with a higher APR rate of interest to a credit card with a lower rate of interest. When doing the balance transfer, a customer is frequently looking to save money by paying less interest or to extend the repayment period of the outstanding balance. In this manner, he stretches his time and lessens interest.

This process of balance transfer is aggressively promotes by approximately all credit card issuers as a means to lure new customers. Such an understanding is delightful to the consumer because the new bank or credit card issuer will offer perks such as a low interest or interest-free period, loyalty points or some such other device or a combination of incentives. It is also alluring to the credit card company which uses this process to gain that new customer, and of course unfavorable to the prior credit card company.

An order of payments for every credit card specifies which balance(s) will be paid first. In nearly all cases payments apply to lowest-rate balances first – highest-rate last. Any balance under a teaser rate or fixed rate will be paid off sooner than any purchases or cash advances. By avoiding making purchases or taking cash advances altogether, the borrower can make sure they maintain the full benefits of the original balance transfer.

The process is extremely fast and can be concluded within a matter of hours in some cases. Automated services exist to help facilitate such balance transfers. Other similar services do exist, but they may not be free to use.

For folks who have a balance on their credit card, there are few deals more tantalizing than 0% interest on balance transfers. Why? Because for a period of time, typically six to 12 months, the credit card company is lending you its money for free. That can mean big savings on interest charges for those with revolving balances.


Tips to make effective use of Personal Banking

If the theory behind getting rich bit by bit could be summed up in two words, they would be these: save money. And what better way is there to save money than to put it in a bank account? When used prudently, bank accounts can help your money grow. On the flip side, when used unwisely, they can deplete your finances. Here are some tips for putting your money to work by putting it in the bank.

Choose an Ideal Savings Account

We can use banks to keep our money safe and secure. The idle money you put into a savings account will earn interest. How much interest? The average is between 2% and 4% annually, with compounded interest.

Don’t Let Checking Account Fees Eat Your Money

It’s discouraging to put your hard-earned money into an account, only to watch it dwindle because of ATM fees, debit fees, monthly use fees and other nickel-and-dime charges. Some banks charge you money in a sneeze. And then there are those that offer free checking, free ATM and debit card use, and no monthly payments. Check out several banks before you set up a checking account.

Also, ask about overdraft protection. Some banks offer it for free. If you ever write a check or make a debit when your account has insufficient funds, the bank will cover the transaction so that you don’t wind up owing bounced check fees to assorted vendors. But take note that you will still be responsible for the bank’s overdraft coverage fees, which can cost as much as $35 per transaction! Keep careful track of your purchases to avoid throwing your money away on these fees.

Certificates of Deposit & Money Market Accounts

Depending on your goals, a savings account might not be your best option. For example, if you want a low-risk investment that returns a good amount of interest, check out Certificated of Deposit (CDs). The only drawback is that you have to commit your money for a designated length of time – typically three months to five years. The longer you leave your money in a CD, the better off you’ll be when it’s time to cash out. CDs are FDIC insured up to values of $100,000.

If you’d rather have swift admittance to your money, mull over a money market checking account. These accounts return a higher rate of interest than regular savings accounts. Some banks require a minimum deposit to open money market accounts, and there are typically limits on the amount of withdrawals you can make each month. Banks are a sheltered spot to keep your money, and they tender services that help you make the most of your money. Go online to compare bank rates and find the best savings account for you.