Monday, November 19, 2012
Transfer of credit card balance is very important in our day to day life. More or less each and every one of us needs to know about it. According to me one should have this concept clear in front of them. Therefore the person must carry some knowledge about how the transfer is made and what is the basic requirement. This transfer could be made form one bank account to another or between accounts present in the same bank. This process had been quite popular because it has been used to draw new customers. Transfer of balance is also encouraged by credit card issuers.
This particular arrangement draws customers because it offers interest free periods and low interest rates. Other than this the arrangement also organizes loyalty points and other combination of incentives. This process had been utilized by credit card companies because their main priority is to gain new customers from these incentives. An order of payment is placed upon each and every card and this has specification about the balance which is going to be paid fast. There is a rule that the lowest rate will get the first payment and the highest rate will come last. Well it is important to notify the fact that if a balance has fixed rate or teaser rate then the payment will be done at a much faster rate than compared to any cash advances or purchase. In this case the highest APR is considered. One could avoid taking cash advance or making purchase and therefore the borrower can gain full benefit from the original transfer of balance. The whole transfer process has become much faster. Within a matter of hours the whole transaction is made. The whole service is automatic and therefore it has played a huge benefit in the transfer of balance. Similar related service could exist but according to me this is the best because no charge is imposed upon.
There are mainly three things upon which a card holder takes decision whether to transfer the credit card balance or not. Normal rate is the first considerable factor. This is mainly the interest rate which is normal in the credit card. The consumer is benefitted if the normal rate is lower. This is because the cost of capital could be lower. At the same time it could be a great disadvantage for the credit card companies because the profit earned by them would become less. The card purchase rate and the transfer balance could be the same. Till the payment date one will have interest free purchase and the transfer rate appears on the basis of the statement. In certain instances the transfer balance could shift to full purchase rate. The transfer is based on monthly outflow. The transfer is made from a high APR credit card to a low APR credit card. Every month the amount is reduced from the card. The next thing that we need to be aware of is that the teaser rate. This is mainly a low rate presented by the credit card company. The low rate attracts new customers and the company entice them for balance transfer. Since the initial rate is low the customers transferring have the rates much lower than the normal interest rates. In this case the monthly outflow is much lower. The most common rate is 0% when a person opens an account. However one should know that this rate is temporary. It has a six to fifteen months variation. After this period the remaining balance is transferred to purchase rate. The credit card company makes additional profit when the rates are suddenly increased. However through this process they make up the loss suffered previously. One could combat with the problem and shift to a new credit card company. These are the two types of rates that any credit card company offers.
Other than this I think one should have a little bit of knowledge about Transaction fee. This is mainly a commission which a credit card company earns. In this case money is transferred from the users account to the account of the credit card company. The transferred debt is 1-5%.The capped amount is maximized in this case and the percentage is also uncapped.
According to me it is best for the individual to make a suitable choice between the fixed rate and the normal rate.
Christina Maria written a number of blogs on the economy and no-spin views on the current economic situation facing the US and the world following the collapse of the banking system in 2012. They can be read at short-term business loan .