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Who should use a Balance Transfer Card?

Written by admin on October 7, 2011.

There are lots of different types of credit card available on the market, but balance transfer credit cards are some of the most popular options. This article looks at what balance transfer credit cards are, as well as some of the people who might find them most useful.

Balance transfer cards do what their name suggests: they are good if you are thinking of transferring over the balance of existing credit cards onto your new one. This is because the cards allow you to transfer over the balance, which essentially pays off the balance on your old cards, before allowing you to pay off the outstanding balance on the new card at a rate of 0% interest. The only thing you have to pay is the handling or administration fee when you are transferring the money over to the new card.

For instance, if you had one credit card with ₤300 owing and another where you owed ₤250 and they were both gathering interest that was increasing your debt, you could transfer over what you owed to your new credit card. This would pay off the original cards and leave an outstanding balance of ₤550 on your new card, which you could pay off over a period of time. As long as you paid off what you owed by the end of the balance transfer period (this varies depending on the card you choose), you wouldn’t have to pay any interest on that ₤550.

This makes these cards useful for people who are looking to consolidate what they owe onto a single card, as well as people looking to reduce the amount of interest they have to pay on their outstanding balance. By contrast, an interest free credit card could be useful for you if you are looking to make new purchases on your card that you would then pay off over the course of a few months for 0% interest.