Credit card balance transfers

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A credit card balance transfer allows a credit card user to transfer the balance on their accounts to a new credit card. This is a process which is actively encouraged by almost all credit card issuers as a means to attract new customers. Such an arrangement is attractive to the consumer because the new bank or credit card issuer will offer incentives such as a low interest or interest-free period, loyalty points or some such other device or combination of incentives. The process is extremely fast and can be concluded within a matter of hours in some cases.

With this in mind, it can be seen how credit card balance transfers can be used by the consumer to best advantage. It is possible, theoretically, to make use of the process time and time again over a period of several years, and transfer balances to new cards which attract 0 percent rates of interest, thereby saving quite a lot of money over the years.

Balances may be transferred from other credit cards which charge higher rates of interest and also other types of accounts where the annual percentage interest (APR) is traditionally higher than most credit cards, for example store cards, where the APR can be double some credit card rates. Credit card balance transfers involving transfer of funds from a store card to a low or zero APR credit card will result in a reduction in monthly outgoings for the card holder.

Care should be taken when using credit card balance transfers, and in particular attention should be given to the length of time of the opening offer, where the APR is either reduced considerably or waived completely. For, at the end of this period, the full APR resumes and interest will be charged from that point on. The only remedy for this is to transfer the balance to yet another card at the end of this introductory period (or, rather, shortly before the introductory period ends).

Automated services exist to help facilitate such balance transfers. Other similar services do exist, but they may not be free to use.

The use of credit cards has, in recent years, been a subject of debate in the rise of levels of personal debt. Care must be taken when using any credit account, including credit cards, store cards, bank overdraft or hire purchase agreement.