Cash Fact

Credit cards offering balance transfer deals were all the rage in years gone by, with a high percentage of new card applications being generated on the back of attractive offers that could save applicants lots of money by transferring across existing balances from another card and taking advantage of a period of interest-free credit. It was a means of generating new customers as well as taking business from a direct competitor, so a double hit well worth paying for. The cost to the card company was effectively an interest free loan of the transfer balance for the offer period, which varied by card from between 6 to 18 months. Obviously for large balances ( providers typically imposed a limit) which remained in place for the full period allowed the cost could be high, but not every customer would take full advantage of the terms offered.

As this method of new business generation became adopted by most credit card companies the transfer of customer’s accounts between providers started to balance itself out. Instead of generating new business and growing market share, card companies were merely churning the customer base between themselves. Card providers would lose just as many customers as they generated new ones, so the cost of providing the interest free credit periods started to prove unviable. The solution many credit companies adopted was not to drop balance transfer offers but to change the terms of the transfer arrangements that limited the exposure to extended free borrowing available to a new customer. Card providers couldn’t afford to opt out of the balance transfer market while it was still popular as that would then just see their customer base gradually diminish as borrowers migrated to interest free balance transfer deals offered by their competitors.

The solution to remaining in the balance transfer process was to impose more complicated terms and conditions which see some customers unavoidably transgressing the rules and either reducing their interest free period of credit or incurring additional interest charges. These methods served to offset the cost of providing these balance transfer deals and allowed credit card companies to remain in the game.

Typically these new and more complicated conditions involved measures such as charging customers an initial fee on the balance moved across. These charges would effectively fund the first few months of interest on the balance involved. Card companies would also charge higher than average levels of interest once the interest-free period had expired. So those unwary customers who failed to pay off or move their balance after the period had expired would face high interest charges, which also help card providers recoup some of their costs. Another condition frequently used is to apply any repayments first to the customer’s interest free balance rather than any new purchases made on the card. Because card companies impose a minimum monthly repayment, the balance attracting zero interest will always be reducing, while the balance generated by new purchases and attracting interest charges, will not start to reduce the whole transfer balance has been paid off. The advice here is to avid making any new purchases on a card setup with a balance transfer, until the full balance transferred originally has been paid off.

There are hardly any credit cards that offer interest free balance transfer without charging an initial fee. By all means shop around for the best deal by checking the transfer fee and looking for a card that offers a zero interest period on both purchases and balance transfers. In some cases the initial fee for transferring a balance is capped to a maximum level, but these caps are usually only applied to card deals with shorter periods of zero interest. Quite often the interest free credit period offered on new purchases is much shorter than for balances transferred from another card so seek out a deal that offers a similar period for both types of balances.

Credit cards need no introduction. Right from a student to an adult everybody uses credit card in some form or the other. A student may use the credit card to pay for his bills or for buying his necessities. An adult may use it to pay for his utility bills and other daily requirements. Some people may use the credit card for extravagant purchases as well. For whatever reason the credit card may be used, the fact remains that they have become an integral part of our daily lives. With competition increasing in the credit card market and the interest rates falling by the day, many companies are coming out with offers to attract customers. Companies to attract customers are coming out with offers like 0% interest on APR or 0% interest on balance transfer. Balance transfer is the transfer of balance or outstanding in one credit card to another credit card.

Advantages of balance transfer

It is an efficient tool to manage our finances. People in financial crisis can use it as an effective tool to postpone payment to credit card companies.

People can also save money because if they are not able to make payment to credit card issuer, then they are charged late payment interest and penal charges. With the help of balance transfer such charges can be avoided.

There are certain things that you should bear in mind before you request for balance transfer:

Fees

Most companies today charge a balance transfer fee for transferring any outstanding balance from other credit cards. This could be a flat fee or it could also be a percentage of the amount borrowed. It is very important that we analyze what transfer fee we are paying and what is our actual financial benefit on balance transfer.

Interest Rate on Purchases

Some credit card companies may attract customers by charging no interest on amount transferred. This policy of no interest is usually applicable only on balance transfer and not on purchases made. Any purchases that we make is chargable at normal rates of interest.

Allocation of Funds

When you take a balance transfer find out how the allocation will be made when you make the monthly payment of your credit card bill. Let me explain the importance of allocation with an example. Suppose you have taken a balance transfer from your credit card company of 500 dollars. You are required to make a monthly payment of 100 dollars towards you balance transfer. You spent 200 dollars on the credit card on which you have taken a balance transfer. When you receive you statement you find you have 700 dollars (500 dollars form balance transfer + 200 dollars from purchases made) outstanding in your credit card. You assume that you have to pay 200 dollars towards your purchases and 100 dollars towards your balance transfer outstanding. So you pay 300 dollars to your credit card company. When you receive the credit card bill for next month, you will be surprised to find out that the entire amount you have paid will be adjusted towards your balance transfer, and you will be charged interest and penalty charges on 200 dollars (purchases made by you). Therefore it is very important to understand how the credit card company will treat any amount paid by you.

Balance transfers are a useful instrument in managing our finances but it is equally important that we understand the terms and conditions of balance transfer.

In our daily lives, we often encounter problems which concern the family, work, business, and many other things. The most commonly encountered quandary is financial problems.

Most working professionals have credit cards, and sometimes these gives way to debt problems. The best possible solution for most of them is to jump at an offer which promises a lower APR, but you should be extra cautious in dealing with such offers.

A balance transfer simply means moving the balance from your existing credit card to another credit card. This is usually taken advantage by most people because of its very low rate of interest compared to the old card issuer.

There are companies which make credit card their business, and competition among them is becoming more intense. The need to stay in the market and stay competitive as ever, has brought about the introduction of balance transfer among credit cards.

You have to be cautious in any decision that you will make. A good choice is one that offers zero percent APR, but this is just an introductory offer. After a specified period, the interest rate charged changes. So before making an abrupt decision, be sure that you have read all the terms and conditions of the card issuer.

There are certain things to consider for a balance transfer with 0% rate:

- the interest rate after the 0% introductory rate expires
- understand the fees, terms, and conditions
- don’t forget the ‘fine print’; most people skip that part, but it is equally important to read that part unless you want to pay unexpected fees in the future
- simple reading is not enough, you must ‘understand’ all the terms, rates, conditions, and other important matters
- take note of the day when the introductory rate will end

Applying for a balance transfer can also save you money. All you have to do is to move all your card balances to the new credit card bearing low rate of interest to achieve utmost savings. Some credit cards offer cash back, points or rewards when you make purchases using your new credit card.

You can make a balance transfer with your bank cards, personal loans, gasoline cards, charge cards, and department store cards.

You also need to close your old credit card. Once you sign up for a balance transfer, you should continue paying your debt while the balance is still pending. Call your old credit card issuer once the balance transfer is confirmed, and make sure that you get a 0 balance from your old company. And finally, you need to close your account.

Once you have your new credit card, don’t just make minimum payments. Pay more money each month until your balance reaches zero. You can also make extra payments, and remember to never be late in making any payments. Above all, use your card intelligently.

You should also be aware of the fees being charged for late payments, cash advance fees, flat fees, and fees for balance transfer, and fees charged if you exceed the credit limit.

Keep track of your expenditures so that you can minimize your bill. If you constantly make unnecessary purchases, your debt is sure to grow rapidly. Be responsible in any action that you undertake, and think of its consequences.

A credit card system is a type of retail transaction settlement. It is named after the small plastic card issued to cardholders. A credit card differs from a debit card wherein, money is deducted from the users’s account on every transaction. In the case of credit cards, the issuer offers a credit for a secified amount of time to the consumer.

Credit cards are also different from a charge card, which requires the balance to be paid in full each month. In contrast, credit card holders can ‘revolve’ their balance with an additional interest being charged on it. Most credit cards follow the ISO 7810 standard and are of the same shape and size.

Credit card transfer is an equitable way of managing one’s credit card debt. The transfer of balance of one credit card to another often helps with the ‘Teaser Rates’ or the introductory rates that are generally offered by major credit card companies a couple of times a year. Usually, teaser rates last for either 3 or 6 months once the card is received. An interest rate is levied depending upon the offer available on the card (which may vary from 0% to up to 9%). It relieves the cardholder of a substantial amount of debt in case he/she transfers the balance from a higher interest rate to a lower one.

Some salient points to be kept in mind for a successful credit card balance transfer are as follows:

1. Timely transfer of balance of credit card. It should not overlap the relevant period as that may result in interest charges being levied upon the cardholder.

2. Availability of zero credit card money transfer on time.

3. Make yourself aware of the offer available on the credit card. Read printings on the promo sheet to gauge its process.

4. Transfer all credit card balances to normal interest card as the store cards may have higher APR rate.

5. Be well informed about the comparison of the two cards against their interest rates and their credibility. A financial broker can help decide upon the choice of a good and interest free credit card, or a lender that offers zero introductory balance rates.

6. Be aware of the expiry date of the zero balance credit card so that it can be re-applied for well in time.

7. As soon as one receives the new credit card, make a call to the lender to improvise your plan of money transfer from the previous one.

8. Do not opt for offers or privileges that may not be of much immediate use (like insurance policies, etc.)

9. Once the transfer of balance from the previous credit card to the new account is completed, close the former account and destroy the card.

10. As the new account now has zero introductory rate, one would be required a minimum rate to repay every month during the stipulated period.

Ensuring all these tenets can help towards a successful transfer of your credit card balance. However, the best way of maintaining one’s inflow is to avoid exceeding expenditure with respect to what you earn.

I just took a quiz on a http://pbs.org site to check my credit card knowledge against real facts. One of the questions was, “Nearly 144 million Americans have general-purpose credit cards. Approximately how many of them pay off their bill in full each month?”

My choices for an answer were 55, 90 and 115 million. In terms of percentages, they were asking me to guess if 38%, 63% or 80% of the credit card holders pay off their bill at the end of each month.

It was not surprising to know that only 38% of credit card holders pay off their bill and the rest are “revolvers.” These are folks who routinely carry high balance and create a lucrative business for credit card companies.

Why doesn’t everyone do this?

Simplified answers are lack of resources, lack of knowledge and poor planning. I give you one example each and hope that you visit my blog at http://mypersonalfinance.com/blog and share your input.

Lack of resources

The economy may or may not be getting better but many still feel the crunch of hard times including corporate downsizing. For those caught in the middle of a lay off, paying mortgage or rent takes higher priority than paying off the credit card balance. They also use their credit cards to take care of monthly shortage that increases the balance and makes it more difficult to pay off their entire credit card bill.

Lack of knowledge

It seems to be one of our characteristic not to look at problems for too long trying to find a solution and if too many problems pile up, we tend to prioritize things and only deal with what we can. Many who have high credit card balance have other things on their mind and automatically assume that they have to live with their credit card forever. The fact is with the intense competition for your credit card business, many credit card issuers offer lucrative incentive for you to credit card balance transfer and if you call your credit card company, you may even be able to negotiate a lower term.

This knowledge is not a solution that may help you pay off your entire balance right away, but it may help you manage it better so that the day you can pay it off comes sooner.

Poor planning

Self-discipline, over optimism and stress impact our abilities to deal with situations. That new gadget, those wonder deals on ebay that seem to call to your credit card test your self-discipline. Spending the next pay raise before it is in your hand shows a healthy dose of optimism that may back fire. And let’s not forget the stress. We do strange things under stress, a visit to a local mall, a well deserved massage to soothe the nerves or going out to dinner one more time are some of the ways we increase our credit card balance.

Most of these situations can be resolved with a little planning. For example, have a list of items you want to buy and their price tag. Wait for the next pay raise to show up, go over your list and buy what is on your list.

Put new gadgets and deals on your list and let it sit for a while. Allow yourself a little cool off period before you buy anything. You may be surprised as how many things you don’t have to have and how many things you can buy for much less a little later.

Understand the stress is a part of life and plan ways to cope with them. A walk in the park is healthier for you and costs less than a walk in the mall.

May you find the ability to pay off all your debts.

* DISCLAIMER: Vishy Dadsetan, http://MyPersonalFinance.com or My Favorite Shop, Inc. do not endorse any product or company. This article and website do not provide legal, insurance, or other professional services. If expert assistance is required, the services of a competent professional should be sought. Although Vishy Dadsetan has made every effort to ensure the accuracy and completeness of the information contained in this site, he assumes no responsibility for errors, omissions, inaccuracies, or inconsistencies.

© Vishy Dadsetan

 How To Reclaim Unwarranted Bank Charges

Banks have a long history of appealing unsavoury actions against their customers.Visit here http://cleardebtshelp.blogspot.com

 They punish the very people to whom they should be most sociable. For example, an overdraft can result leverage a huge £40 evenness (usurious by strikingly standards). through banks publicly promote their willingness to sacrifice their bottom dodge since the customers’ benefit, they continue to draft unfair charges castigate those same customers. If you’ve been the decrepit gull of hovering overdraft fees or penalties for overspending on your credit cards, experienced is a approach to reclaim those unfair bank charges.

Knowing Your Rights

By law, a bank care charge a cost whereas what is willing a “breach of contract.” However, what largely consumers don’t win is that the law states that the penalties assessed by the banks fault only reflect the amount of loss incurred by the bank as a result of the discontinuity. The equity cannot exceed that amount. That is, a bank cannot good from the charges assessed.By bringing this clause to light, thousands of people lap up been able to reclaim the unfair fees charged by their banks. An interesting note is that the banks have refused to acquiesce these claims to see the inside of a court. Most experts see that banks do not enthusiasm a original admitted that would force them to reverse years of wicked fees.

Steps To Reclaim The Charges

First, you need to effect unimpaired of your bank statements as the past 6 years. That is the maximum encompass of age for which claims against unfair bank charges can exhibit filed. traject a bulletin to your bank requesting that they reverse any overdraft charges. Mention the clause in the law that details your rights and the bank’s limitations. If your bank expresses a willingness to reverse a factor of the charges, filth. respond by demanding a complete reversal of all bank charges. If your interrogate isn’t fulfilled, tail your claim at

Can Justice Prevail?

As the financial Services government (FSA) struggles to work keep secret the banks to resolve the issue of partial charges, the racket of Fair Trading has introduced a test case to the High Court. Recently, the High gavel jockey issued a verdict seeming to uphold the unprincipled charges. But, owing to ensconce most cases, the details of the ruling compel survey. The details may yet hold some acceptance of justice for bank customers. Until then, this breeze in remains unsettled.Visit here http://cleardebtshelp.blogspot.com

With nearly 200 balance transfer offers on the market, you may be misled into thinking that you have an infinite choice. However, in the search for a new service provider to take charge of your account balance, there are two obstacles to jump. First, you can not transfer balances between cards supported by the same supplier, or is part of the same banking group. For example, it is not just MBNA issue its own cards, it endorses and Virgin Money Card Alliance & Leicester, the name of a couple.

Card are seeking funds for new funds, rather than recycling the balance between its brands.

Secondly, most of the offers are only available for new customers, so we can not afford to complete the circuit card providers too frequently. Typically your account should have been closed between 12 and 24 months before they can be regarded as a new customer.

75% of the balance transfer offers available today are offered by vendors of just five, with Co-operative Bank to take a slice of 26% and 27% MBNA. So effectively, while 45 cards brands offer the balance transfer offers, when shopping for a new pact of your choice is more than halved, limited to only 17 vendors.

It is important to check the fine print to deal with a balance transfer, and to determine who is the provider of credit at the same time for your new credit card and address, otherwise you may find yourself with a new card and transfer your balance or to be denied the accused at the normal rate.

Not only do you have to navigate through the maze of credit providers and banks to find the address for you, that the tightening of credit criteria you may also find it more difficult to be accepted or you are perhaps much lower offered a credit limit.

This time last year, we saw the beginning of a new chapter in the long march credit card 0% war which took the life of balance transfer door to new levels. However this year, the market has remained relatively calm, with the same contenders longstanding retaining their existing offerings.

All of this said, it is still worth investing some time to find a competitive home for any existing balance, especially considering rates have increased in recent months and this is expected to continue in 2008.

On average, the rate of purchase is currently about 16%. By providing a 0% deal for 12 months (assuming you made a minimum repayment of 2% / £5), you could save up to £140 interest on a balance of £1K. And if your budget to pay off the balance of 0%, then the interest savings is still £64.

But you have to consider more likely to suffer a tax balance transfer. The average is now 2.56%, and 96% of these costs are uncapped.

The in’s and out’s of Credit Card Balance Transfers

The holiday season is approaching and you are neck deep in debt. Gift yourself the best ever Christmas gift, that of a debt free New Year. Make use of the attractive credit card balance transfer plans card issuers offer this season. Wondering what credit card balance transfer is all about? Let me explain the Who, What, Where, Why and How of credit card balance transfer.

Who can go in for a balance transfer?

Anybody with one or more credit card debts can go in for a balance transfer of cards. Typically those paying high interest rates on their credit card debts can apply for a balance transfer. You will be asked for your social security number and the balance details of the old card you would like to transfer.

What exactly does a balance transfer mean?

Let us assume you have a card ‘A’ with a debt of $1,500 and another card ‘B’ with a debt of $500 and are paying 18% interest on each of them. A new card issuer ‘C’ offers a new card with an interest rate of 6%. With a balance transfer, ‘C’ will pay off the balances on ‘A’ and ‘B’. In turn, you have to pay back ‘C’ the transfer amount debt of $2,000 ($1500+500) at a rate of 6%.

When should you not use your balance transfer card?

If you are getting a new card because there is an attractive balance transfer scheme, then use it just for that. Such cards may usually have high rates for purchases or cash withdrawal. Even if you make the payment for the purchases made, the card company usually diverts the payment towards the lower interest debt first, which in this case would be the transferred debt.

Where will I get good deals?

This is when you have to pay attention to all those irritating spam messages in your inbox, pesky marketing calls and the free pamphlets distributed in the malls. You may actually land with a good deal.

How to find a good balance transfer offer?

Most card issuers have special offers and discounts for balance transfers. When you apply for a new card you’ll be asked if you’re interested in a balance transfer. You can find a comprehensive list of offers tailor made for your situation at sites like Billshrink.

There was a time when my friends and I found that we were lagging way behind in our credit card bill repayments. There are the monthly insurance premiums, mortgages and car loans to think of, and we were not sure if our salaries (combined with our respective husbands’ salaries) could take any more load.

A balance transfer was at the back of my mind, but I did not have enough knowledge about it to even have the courage to bring up the topic. Lucky for me that a friend of mine was working at a finance company. She gave me a lot of great advice that helped me out.

What is a balance transfer?

If you have not been able to pay for your credit card debt, you can transfer the balance to another card issuer. By doing this, you can avoid paying hefty amounts as late fees or other kinds of penalties. Many people opt for balance transfer because another issuer is offering lower interest rates.

Why is balance transfer a good idea?

If you have been unable to pay off your credit card balance, it is most likely that the finance charges are adding up to your debt on a monthly basis. If you avail of a balance transfer credit card, it is like starting afresh.

You do not have to worry about being charged with late payment fees as long as you keep paying for the minimum amount due every month. It is always better if you pay more of course. Take note of the fact that several balance transfer card issuers charge relatively low interest rates. You could end up saving quite a bit.

What is the procedure for obtaining balance transfer?

Well, you certainly cannot avoid shopping around and looking for balance transfer card vendors. Make sure that their interest rates are much lower compared to your old card issuer – it’s possible to get 1% to 2% interest if you take your time negotiating and researching for a reputable company.

In fact, many banks are willing to offer balance transfer credit cards at no extra cost. Some will give you a grace period of six months to a year, where in they charge a lower interest on your transferred balance. Because these card issuers want your business, they will be more than happy to accommodate you. You could end up with a new card within four weeks.

How is my credit score affected with balance transfer?

This is the tricky part. If you are just going to transfer the balance to another card, your credit score is safe. Some say that it is better to close the old credit account, but that is not true in most cases. Not only does part of your credit history get “erased”, your debt ratio will be affected negatively especially if your new card has a lower credit limit.

On the other hand, having an open bank account will also affect your credit score, but not as much as closing it. The best thing to do is to keep both accounts open. You could get rid of your old credit card or you could continue to use it, even as you make payments on the new card.

If you are stressed out by high credit card debt and rising interest rates, you are not alone. The average US family carries over $7,000 in credit card debt and over $16,000 in total debt (exlcuding a mortgage).

In recent times, most of us have seen our interest rates increase too. Higher interest rates cause a couple of problems. It takes longer to pay off debt, and we spend more money servicing the debt we do carry. You understand that higher interest rates mean that more of your payment goes to the actual debt while more pays the interest.

I can explain some dramatic examples with a fairly low credit card balance too. Take a $1,000 balance on a credit card where the borrower pays $100 a month.

For a twenty-three percent interest rate, it takes a years worth of those hundred buck payments. In the end, they have paid off the debt plus another $123 in interest. Imagine running up $1,000 in debt for travel, a dental emergency, or car repairs, and not being able to pay if off for a year!

But if a borrower can find a 0% credit card balance transfer offer, they can do much better. Many offers start off with a zero percent rate for 6 months, and then they reset to a moderate 11 percent rate after that.

The hundred dollar payments will be applied to the balance for the six months of the 0% offer. So $600 will be paid off. Then the interest charges will only be calculated on the remaining four hundred dollars. That amount can be paid in about four months. Once month will include an extra $10 or so to pay off the interest.

So with the lower rate, the borrower pays much less interest and gets the balance paid off much sooner.

Again, there are other benefits. A lower balance may help raise credit scores. Once big factor that agencies use is the percentage of money that is charged vs. the limit. This means that a consumer with a higher credit score has a much better chance of paying off future loans in a timely manner too.

Make an attack plan that you can stick with. Some people like to pay off smaller balances first. Nobody can doubt that it is satisfying to get a loan paid off.

Financial experts tell consumers to apply the most money to higher balances. For example if you have 3 cards, with balances of $200, $800, and $2,300, you should try to pay the most money to the card with the $2,300 balance and just pay the minimums on the lower cards.

Why does this strategy work? The larger balance will probably also be the one that keeps getting the larger interest applied to it. And the higher balance is probably closer to the credit limit. The idea is to spend the least amount of money on interest payments, get debt paid down the quickest, and to keep as far away from the credit limit as possible.

You need to examine your own unique situation and come up with a plan that works for you. The important thing is to commit to a strategy to reduce your debt, and then to stick to the plan.