Nowadays, there is great value to be had on credit card interest rates, and this has all been borne out of competition between the different banks and financial institutions.
So, what is a balance transfer? A balance transfer, in simple terms, is where you transfer the balance of money owed in a credit card account, to another account with another financial institution or bank. This is often done to take advantage of better interest rates.
Credit card companies will often offer attractive rates to encourage new customers to transfer their balance to them. Incentives are usually offered also, such as lower rates for a fixed term, or even 0% interest due up to a certain time. Some institutions may even run schemes, like loyalty cards, that accumulate additional benefit. Card companies will often offer 2 different rates, a “Teaser” rate, which is low (or nil), which runs for a fixed period and then expires; and a normal rate, which is the rate you will progress onto after the cessation date for your “Teaser” rate has passed.
So, are you looking for a balance transfer? What should you know, prior to making an application to transfer your balance to a different financial institution? The first thing you should do really is some research – the internet is probably your best tool available to help with this, as you can compare what the difference between the institutions is, quite quickly.
You may find that price comparison websites are helpful for this task, but it is always a good idea to double check the rates directly on the website of the financial institution, to ensure that the rates that are quoted are entirely up to date.
“Teaser” rates are an incentive to get new customers to sign up, so it is worth paying attention to what the normal rate you will graduate to will be, if you decide to go with one company over another. The “Teaser” rate may be as low as nil, but the Normal rate could then be quite high after your expiration date, so this is important to keep in mind.
Also, ensure to read the small print – there may be a clause that will prevent you to again transfer within a certain time frame. This has come about as a result of customers taking advantage of the “Teaser” rate, and immediately transferring their balance to another company once this rate had expired.