Thursday, September 19, 2013

How To Manage Your Credit Card Balance

It is very useful to have a credit card because it gives you quick access to money when you need it. The problem is that you might just go crazy spending money on it and be left with a large balance to deal with. The best thing to do would obviously be to pay off the outstanding amount without any delay. However, this isn't always possible, in which case you will have to pay penalties at a very hefty rate of interest. The simplest (and cheapest) way of dealing with this issue is by doing a balance transfer to a new card that offers you a lower rate of interest.

You'll be quite surprised to find out that it is very easy to transfer your card balance to another card. You do need to look around for a list of cards that offer:

1. Low rates of interest on the balance
2. Zero percent balance transfer fee (or at least a very low rate)
3. Interest free period
4. Loyalty points, discount coupons or any other incentive

Interestingly, there are quite a few card companies that offer attractive introductory rates in order to draw in new customers. They will generally give you a new card without any hesitation because they are eager to do business. As a matter of fact, this is a well established practice in the finance industry to offer an attractive credit card balance transfer offer.

You need to be very careful about using this technique of dealing with your outstanding credit card balance. For starters, you need to use a credit card balance transfer calculator to understand whether the shift will be beneficial for you or not. Even so, you should be careful because this can give you a false sense of security regarding your ability to manage your finances.

Most money managers will tell you that you should work towards paying off your credit card debt instead of maintaining it because you will eventually have to pay for it at a higher rate of interest. For instance, if you have enjoyed zero percent interest for a certain period then you will likely have to pay a very high rate once the initial interest holiday is over. The total amount of money you pay in interest can work out to be very high. Even so, you need to think about managing your credit card balance well in case you are facing a cash crunch.

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