The Awful Truth About Credit Card Balance Transfers
Article; first published
April 18, 2007
This article aims
to tell you the awful truth about how banks apportion the month's
repayment of interest by allocating various levels predicated on the
different rates of interest that they charge, so that users of credit
card balance transfers will invariably be punished for borrowing,
whatever they do. It also shows why it is essential to replace that
credit card once the introductory credit card balance transfers period
image above to apply.
finance supplier lately launched a television advertising campaign that
focussed on the fact that most banks designate peoples' usage of their
cards into particular groups then allocated a particular interest rate
to each group. These hierarchies were based on the spending of typical
card users. Such people include holders of credit card balance transfers.
you go by what the advert is saying, most credit card companies accept
the credit card user will begin usage of the new credit card by transferring
a previous balance for an average period of 39 weeks. The deal will
be at 0 per cent interest for that time. The credit card user will make
a new purchase with this new credit card that will on average draw a
rate of around fifteen per cent.
Did you know that
you could write
off credit card debt by using this service? So download your free
information pack today and write
off your credit card debt by the summer.
credit card holder may then use this credit card balance transfers procedure
for getting hold of some quick cash with the same card (never a good
strategy!). Your interest rate for taking out cash is higher than the
rate for purchases, and this is on average between 17 per cent and nineteen
percent but can be as much as 23 percent or even more than that.
here's where the financial trickery starts. When it comes to the monthly
payment, the credit card balance transfers card lender will put the
least expensive transactions at the top of the queue when the time comes
to pay the minimum, or whichever level of repayment has been chosen.
the costlier aspects of your credit card account - usually the cash
borrowing - is effectively ignored where it will rack up greater and
greater amounts of interest, and where all that interest will be further
compounded and carried forward when interest is charged to the existing
debt (we all know how it works, don't we?)
average user of credit card balance transfers may believe that they
are paying off the debt in a uniform way, and that if one type of cash
attracts a higher interest rate then that will be balanced out by the
goods purchase which will be charged out at a lower interest rate. But
of course that is not what is happening. The fact is that the credit
card company will always put the less costly portion first in the paying
hierarchy, and allow the costlier elements to burn your money away.
costlier elements will be last to be paid, and you are not in control
of this. To take a typical example, for the nine month usage of an average
credit card balance transfer's interest-free period all the payments
will be used to pay the interest-free part while the more expensive
purchase (or cash) borrowing clocks up the interest.
the more expensive part of the borrowing will be at the back of the
queue, clocking up the interest, and this is paid off last, if ever.
Last of all to go will be the cash advance, with its massive 23 percent
or whatever it is. The bitter irony here is that the longer the so-called
interest free period of grace, the longer the length of time this amount
is allowed to rack up the interest! Then when you add on the percentage
charge that most credit card balance transfers nowadays charge for making
that balance transfer, then you know why the banks are making so much
money out of us.
only answer to this is to get rid of the credit card balance transfers
at the end of the zero interest period by transferring the entire balance
to a new card. That is the only way to do it. To do otherwise is to
invite a cycle of endless debt.
Goodfellow is an Internet marketer and technologist. His credit card
sites automatically alert customers when their interest free period
is about to end. See credit
card transfers US, and the UK site is credit
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