Credit_Card_Balance_Transfer_Revisited by zhucezhao


									Credit Card Balance Transfer Revisited

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Have you ever considered the dream ticket of always having an interest
free credit card at all times, no matter what the circumstances? This is
a trick you can pull of for years, in theory at least, by closely
following the rules of credit card balance transfer. This article
revisits those rules in a more competitive market.

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Article Body:
Credit card balance transfers are one of the financial world's great
empowering features, but they can only be done successfully if you follow
the rules and don't fall foul of them. Firstly you must consider the
benefits, then the pitfalls. These two aspects are more or less permanent
features of the credit card balance transfer system.

The benefits can be summarised as the product of a twofold strategy:

You can transfer credit card balances once the initial interest free
period is up to another card, and so continue your interest free credit.

You can more or less plan to do this in advance as long as you have a way
of finding new cards to transfer to, and you stay in control of your
finances and spending.

Taking these two together - the transfers and the planning - you can aim
to give yourself interest free credit for a long time, even interest free
credit for years.

The pitfalls are as follows, and must be considered carefully. These are:

Overshooting the Interest Free period

This is a crucial and fundamental issue. There is no point taking out a
card with a known zero interest period or low interest period if you just
go and breach that time period. Check the date that the interest free
allotment ends, and then backtrack by about ten days before then. Ten
days is about the right time to apply for a new card. Remember that the
application itself will take time, and that this time will vary from card
to card. Take into account seasonal changes in the speed and
effectiveness of the mail delivery. In the run up to Christmas, for
example, it would be wise to allow two weeks.
Minimum Repayment Obligations

Remember to check on what your agreed monthly repayment arrangements are.
You may have to pay back a certain percentage (three percent or more,
depending on the card) or risk incurring minimum payment fees. This is
true even if it occurs within the interest free period, as the credit
card provider will want to know that you can at least maintain a minimum
repayment to justify the confidence in you when you originally signed up.
On some cards, however, such an arrangement may not apply.

Late Payment Obligations

Much the same as above, but this time the emphasis is on paying within a
certain time per month. Again, the card issuer may want some kind of
assurance that money will be repaid even though interest is not being
charged. There will be an extra fee charged if your payment is late, and
for small balances this may well be proportionally higher than the
interest which would otherwise have been payable (if the charge is a lump
sum, as is usually the case). If this arrangement exists, then the best
policy is to pay the minimum the same day as you get the statement.

Annual Fees

Remember to check the small print before you apply for the card. This may
include information about an annual fee, which is the fee that the issuer
will charge you every year for using their credit card. By no means all
credit cards have an annual fee, but you must remember to build this in
to the total cost of using the card. Things like annual fees tend to
muddy the APR figures, which would otherwise give a good indication of
how much your credit card actually costs. It is therefore an important
factor to consider when deciding which credit card is the right one for

Exceeding Your Credit Limit

Whatever you do, don't exceed the credit limit that you agreed and signed
up for at the time you applied for the card. If you do this then you will
probably be charged (depending on the card supplier) a percentage or a
flat fee. This would be particularly reckless, as it would go against
everything that you set out to do in the first place, namely to gain a
fixed amount of credit without paying any interest on it!

Of the above five negative factors to be considered, it is always best to
think of them all together, as each of them may impact in different
proportions depending on the credit card and lender. For example, one
card may not charge annual fees, but will come down very heavy on late
payment charges; while another card will be lenient about an overextended
credit limit but will offset this with a fixed annual charge.

It is possible to meet the criteria of the first two positive benefits,
as well as avoid all the pitfalls by careful timing. As long as you
transfer your credit card balances in a timely fashion, and observe the
rules of the transfer itself, you cannot go wrong. Always remember that
there are more credit cards out there to transfer your balances to.

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