No Fee Balance Transfer
If you’re looking to make a saving on the amount that you spend on borrowing, you should consider a card that offers a no fee balance transfer. With so many credit cards on the market, there are better deals on credit than ever before, and many lenders will offer a no fee balance transfer when you take out a credit card with them. The result is often a hefty saving – and, if you are clever, you can use a no fee balance transfer facility to make continued savings on your credit.
What is a no fee balance transfer? Simply put, it is a facility that allows you to move your borrowing from one credit card to another to take advantage of low rates and special offers. This has a number of potential advantages. By moving to a lower rate of interest, you can pay off your real debt, rather than continually making payments that only cover the interest. In addition, you can transfer the balance on more than one credit card to your new credit facility (depending on your credit limit) – and this means consolidating your debts on one card, which can make life simpler, as well as avoiding paying annual fees on more than one credit card. You can also transfer the balance of your partner or spouse onto your card, which can make sense if their credit card is offering higher interest rates.
Before signing up to a credit card agreement, ask yourself a few questions about the card you’re considering. There will usually be an introductory interest rate on offer – so check how long this lasts. Second, after this preliminary offer expires, what will the rate of interest be, and will this apply to both transferred balances and new purchases? It’s worth perusing the small print carefully – a no fee balance transfer always looks good on paper, but the devil is always in the detail.
The other consideration to bear in mind is the card’s annual fee, if any, and charges for going over your agreed credit limit or being late with payments. The most important thing in any credit agreement is not the headline rate of interest, but the total cost of borrowing over the lifetime of the card – so it’s important to be clear how much this is going to be. It is not a good idea to transfer over large balances onto a new card unless you’re absolutely clear that the preferential rates of interest on offer will apply to the transferred sum.
Even if the card you’re looking at doesn’t offer a no fee balance transfer, that’s not to say that you shouldn’t consider it anyway. Fees are often relatively modest, and credit card companies often make their money back in other ways; e.g., through annual fees or higher interest rates after the introductory period – so transferring your balance to a new card may be worthwhile even if there is a charge.
If you want to make continuing savings on your borrowing, it’s possible to use no fee balance transfer offers to your advantage. Most introductory offers will tempt you in with low or zero interest rates for a period, after which normal interest rates will kick in. But, by transferring your entire balance out of the new credit card and onto a third card with a similar deal, you can continually take advantage of lower rates, rather than paying the headline rate that everyone else pays. As ever with credit cards, though, if you want to do this, it’s worth checking to ensure that your agreement will allow you to do this without any fees or penalties.
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