If you are paying a high rate of interest on your credit card, then the smart thing to do is to go in for a balance transfer.
This idea is a very popular one.
Hence, many credit card balance transfer applications are being received.
People often presume that this will end their debt quickly.
That is not the case.
You cannot avoid making monthly payments.
If you opt for balance transfers, the rate of interest applicable on your loan will come down to zero for a fixed period of time ranging from half a year to one year.
After this period, the interest rate bounces back to normal.
Those who have an outstanding balance on their card account opt for balance transfer.
You can opt to transfer the entire balance or can transfer only a part of it.
The initial time period is a good one because the rate of interest will be zero.
You can save a lot by avoiding high interest payment.
However, you should use this money to repay the debt and should not spend it on unnecessary and frivolous things.
Some insurers also offer to pay off your existing loan overdraft by transferring the balance to your credit card.
This also attracts many people to such credit cards.
However, this card is not free offer some disadvantages.
A credit card balance transfer is not a simple task.
Many issuers charge a transaction fee which can range around four percent of the balance amount being transferred.
You should be prepared to pay the same.
If you make late payments after the balance has been transferred, the beneficial interest will cease and you will have to pay a high rate of interest.
Many card issuers have hidden costs in such transactions rates which are never disclosed until it is too late for the customer to avoid them.
The most important terms and conditions of such a credit card is usually a part of the fine print.
Nine times out of ten, people simply ignore the fine print and sign the credit card balance transfer application.
This leads to significant disadvantages.