The Truth About Credit Cards
You already know that credit card are a very convenient way to pay for those very desirable big ticket items. You are also probably aware that they can provide peace of mind in case of an expensive medical emergency or car accident. Perhaps you need to fly out for a funeral of a loved one who suddenly passed.
However, credit cards can also help you to establish a solid financial foundation upon which you can build a stable future. Even if you have a lot of money saved, or make a decent income, you likely will need credit to help you pay for things like a new car or your home. This is why it is important to use credit wisely regardless of your financial situation.
There are many things that you might not know about credit cards. For instance, the balance that you see on your statement reflects multiple, separate balances that your card carries at any given time. This typically includes standard purchases, balance transfers, and cash advances, but can also include others. These three balances also carry their own interest rates too.
What you might not realize, is that while you might have one of those credit cards with 0% APR on balance transfers, you might be paying three times as much interest for your standard purchases. Also, the minimum payment that you make every month is applied to the balance with the highest interest rate.
Credit Card Strategies
There are many people who use credit responsibly, even if they do not fully understand how credit cards actually work. For the most part, it does not matter that you understand everything as long as you have a well-structured plan for maintaining responsible upkeep of your credit. This includes working out a potential payment schedule that projects when you will pay off your debts according to the payments that you are making or want to make.
Actually, the most recent credit card reform now requires that credit card companies provide this information to you, making this step much easier. You can take the information they provide and more accurately plot out a course of financial freedom.
However, while you may have a fairly good or even excellent credit score, there is absolutely no reason why you should be overpaying your credit card company for their convenient services. This is where credit cards with zero interest on BT can help you. For example, store cards typically have higher interest rates on purchases, quite simply because they do not carry the other balances that cards issued by national banks do. These high interest rates can kill you in the long run. If you are able to transfer the balance from this card to another card with a low transfer APR, you can easily save yourself a lot of money.
Balance Transfer and Consolidation Offers
This is how 0% interest on Balance Transfer credit cards can truly help you. If you take your high-yielding cards or debts and transfer the balances to a card with a 0% option, you immediately save money because you do not have to worry about the interest rate. While this stipulation doesn't always last forever, it does give you a little more flexibility in terms of paying the balance down. If you have a few cards with high balances, consolidating them to a quality balance transfer card can reflect an immediate monthly savings of a hundred dollars or more.
You see, when you use credit cards with 0 APR on balance transfers to consolidate your existing balances, you not only remove the interest rate from the equation, but you, in fact, change the equation itself. For instance, by consolidating three cards onto a new one, you also reduce the amount of money that you pay every month. If you had three balances, then you made three payments, which is obviously three times larger than what you would pay if you only had one card.
This drastically reduces the amount of money you are required to pay every month, which means you can either pay the amount down much faster or take the savings and invest in another promising venture. Typically, though, offers that feature such low rates are temporary and the interest rate will be set to readjust after a period of time. This is usually in a three-month integral, often up to 12 months.