by Gordon Hamilton

Created on: January 12, 2010

How to save money using balance transfer credit cards is a process which more and more people are examining in the wake of Credit Crunch and the continually high levels of interest charged on credit card balances in relation to bank base rates. Saving money on balance transfer credit cards is entirely possible and to a considerable extent but it is vital that one examine the full terms and conditions of the new credit card agreement prior to signing it and transferring one’s balance.

The most common benefit afforded by balance transfer credit cards is that they offer the new account holder an interest free period on any balance or balances which they transfer over from their existing credit card providers. This is usually for a period of between six to twelve months. It means that anyone who has a large outstanding balance on one credit card and finds that the majority of their minimum payment each month is comprised only of interest and that they are not effectively reducing the outstanding balance on their credit card can in very real terms reduce the capital amount of their debt.

When one explores the possibility of saving money using balance transfer credit cards, it is vital that one consider how one intends using the new credit card. Where the new card is not to be used and focus is to be entirely upon reducing if not actually paying off the outstanding debt, this is where one is likely to secure the greatest benefit. Where, however, one wishes to continue to use the new credit card, one should be aware that all new purchases will most likely incur interest charges. It is important to consider the interest rate that will be charged on all new purchases in this respect and know that when payment is made to the card, these payments will in the first instance be used to reduce the interest free debt and not the interest bearing debt.

It is important also to consider the terms and conditions of the new balance transfer credit card in relation to when the interest free period is at an end and how much of one’s outstanding debt one believes one will have been able to clear. The interest rate charged thereafter may be prohibitive where one is not likely to have made sufficient inroads to one’s outstanding balance and negate any initial perceived benefits.

How to save money using balance transfer credit cards may very well be about conducting the transfer process several times over a period of a year or even more. Should this be the case, however, one should perhaps explore the possibility of a debt consolidation loan for what is clearly a problem debt and investigate whether it may prove more cost effective to eliminate it altogether in a far more timely fashion.

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