There are many credit cards that offer a zero balance transfer. With this arrangement, you do not get charged extra fees or interest when you transfer existing debts onto your new credit card. However, before you get too excited, keep in mind there are some things you need to think about when using these types of cards.
Important Factors You Should Think About Before Initiating A 0 No Balance Transfer
Factor One:
Look at how long the offer lasts. Most will be around six months, though there are a few that can last up to two years. Either way, this indicates how much time you have to pay down your debt. Divide this amount by what you intend on transferring. So, if you transfer $1,000, but you only have 6 months without any interest, you will need to pay $166.67 each term if you want to avoid
getting charged.
Factor Two:
Check to see if the credit card offers any rewards programs. If they do, you could earn extra cash every time you use your card. Note that you would have to make a charge each month to get your points.
Factor Three:
Find out how much interest you will get charged if you cannot pay down your debt during the promotional period. In some cases, you might find you save more money sticking with a card with a lower APR, yet no interest-free promotion. It ultimately boils down to whether or not the 6 month timeframe is enough to take care of your debts. Getting debt management help would be beneficial.
Factor Four:
Understand that lenders do not offer 0 percent APR to help you. Their main goal is to entice you into using credit. They figure that if you start charging now, you will not be able to pay off everything before your time is up. So, try not to get too drawn in by the marketing hype.
Factor Five:
Make sure there are no hidden fees associated with your zero balance transfer.