How a credit card balance transfer occurs
A credit card holder may open a new credit card account with another credit card company with an aim of transferring credit balances from his old credit card to the new card. When this happens, the card holder hopes to settle his debts easily by transferring them to his new credit. This is primarily because the new credit card has features that make it easy for him to pay the credit. Transfer credit simply means that the previous balances are taken over by the new credit company. This new account attracts lower interest rates which may at times be as low as zero percent. Although this low introductory rate lasts for only a short period, it can really pay off when trying to settle debts fast. The process of transfer credit is simply free and anyone can take advantage it and be able to settle his debts very fast. You are only required to have a valid social security number and a contact address and you are then done with the process.
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Purpose of credit card balance transfer
Most credit card holders are faced with the problem of managing their credit. Due to their bad spending habits, they quickly run out of credit and are soon faced with the problem of bad credits. Thus, transfer credit becomes very important as a way of helping these card holders with bad credits settle their card debts easily. As most credit card companies charge rates of as high as 16%, it becomes practically difficult to settle these debts easily. With a new credit card account, one is given a grace period where the introductory rate may be as low none implying that the card holder pays only for principal amount of his debt less the interest. Credit transfer thus becomes very important in the sense that there is no interest amount that is being added on to the debt and settling it becomes very easy and fast.
What to consider when effecting credit transfer
Transfer credit is a very wise way of settling debts but it’s always important to trend carefully. Although these is an excellent way of finally solving your credit issues, some credit card companies may have hidden charges that may act against you. For instance, a card company may charge you transfer fee which it deducts directly from your card making your balance do lower. Also, annual fees may apply in certain companies which you may be asked to pay before transferring your balance. Others will ask for joining fees which further lowers your balance. Such credit transfer fees may be charged as a percentage of the whole amount being transferred while in others, the charges will be capped.
Benefits of credit transfer to companies
While transfer credit benefits the customer majorly, the new company also benefits in some way. To start with, it gets a larger consumer base from the new costumers. This simply means new and more business for the company. The company also makes more profits after the introductory period is over as it charges higher interest rates to its benefit.
