Musical Debt - All About Balance Transfers

Paying off debt with high interest rates can be both frustrating and seemingly never-ending. Money put toward these overweight credit card bills will go to cover both interest and principle, but for every three steps forward, it seems one step back is taken as well.

In order to save a little cash that would otherwise be spent on high interest rates, sometimes transferring a credit card balance to a card with lower interest rates can work well in reducing debt and interest expenditure. Extensive research on all terms and conditions of a new credit card account and the desired balance transfer should be handled prior to executing the actual transfer.

The trickiest part of executing a balance transfer is selecting the credit card with the best terms of agreement. Often, a flashy, extremely low introductory rate lures in unsuspecting cardholders, who then transfer their balance only to find out the hard way six months later that the introductory rate has expired, leaving them with a hefty balance to pay off at a similar rate to the former credit card account.

This problem can be prevented with some careful research and close examination of the fine print. With amazingly low offers of zero percent interest on balance transfers, it is hard not to act quickly, but consumers will be much better off by learning everything about the card before shipping their balance off to an unknown final fate.

The Chase Platinum Visa® Card offers new applicants zero percent on purchases and balance transfers for up to 12 months. Following the introductory 12 billing cycles, interest rates climb to 8.24% variable, 12.24% variable or 16.24% variable, dependent upon Chase's evaluation of cardholders' application and credit history. Likewise, with the Discover® Platinum Clear Card, an eight month introductory period offers zero percent, followed by 9.99% and 16.99% variable rates.

Reading the fine print on the credit card pricing and terms agreement will alert card users that no grace period exists for balance transfers, convenience checks or overdraft advances in Chase's Platinum Visa® Card. Additionally, a transaction fee may be charged for balance transfers and convenience checks, with this card requiring 3% of each transaction's total amount, but not less than $5 and not more than $75. The Discover® Platinum Clear Card charges 3% per balance transfer, with at least $5 and at most $50 charged.

Furthermore, cardholders must be aware of the APR's ability to change based on irresponsible borrowing behavior. For example, if the consumer defaults under the card member agreement, the APR rates are subject to increase dramatically. To put things in perspective, the default APR on the Chase Platinum Visa® Card imposes 29.49% on cardholders.

Default generally involves failing to pay at least the minimum balance or doing so after the due date has already passed. Exceeding one's credit line and paying with invalid currency also may jeopardize one's standing with their creditor.

Transferring a balance to a reputable credit card account with favorable terms of agreement can significantly impact a cardholder's ability to whittle down debt in a shorter period of time. With responsible spending and bill paying, the balance should decrease consistently, leaving consumers who have transferred balances with more free money than they would otherwise have.

Tips for choosing the best balance transfer opportunity:

TIP 1: Read all the terms and fine print of the agreement prior to signing up for an account or transferring your balance.

TIP 2: Investigate the terms to find out how much you will be spending on a per transaction basis. Know what fees you will incur by transferring your current balance to a new credit card account.

TIP 3: Once you have selected your new credit card account for your balance transfer, continue to pay at least the minimum payments on your old account until the transfer has finalized.

TIP 4: After your balance has been transferred, pay off as much of the debt as you can afford in order to significantly reduce your balance before the introductory APR period concludes.