A balance transfer is where all or part of your debt is transferred from a purchase credit card to one which benefits from a reduced interest rate.
Balance transfers are a great way to slow down your debt by reducing the interest attached. If you have spent on a purchase card, and are paying a high interest on the balance, you can transfer it to a card that has 0% interest for a set period of time. If you can manage to repay this amount within the deal period, then you will not have to repay any interest at all. If the deal term passes, you will just pay interest on the remaining sum. So in effect, you have received an interest free consolidation loan.
If you are considering a balance transfer, you should speak to your bank or credit card provider about how to transfer a balance. You can also usually transfer your balance online on the bank’s website.
There are several different factors that can affect the charge or fee of balance transfers. You should make sure you check the potential costs before you transfer your balance. The fee charged will often depend on how much you are transferring.
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