Benefits of Transferring a Balance to a Fixed APR Credit Card

A credit card balance transfer is the act of relocating an existing balance from one credit card to a different credit card. In most cases, the credit card to which the balance is being transferred has a lower interest rate than the credit card that originally carried the balance. Balance transfers are money-saving moves that, if planned well and carried out wisely, can greatly benefit cardholders.

There are two main types of balance transfers that will be discussed here - balance transfers to a credit card with an introductory APR and balance transfers to a credit card with a fixed APR.

0% Introductory APR Balance Transfers
Some credit cards currently offer a 0% introductory APR on balance transfers for a specified period of time - usually six, nine or 12 months. Any amount transferred to the card will be attached to this 0% APR until the introductory period ends. After the introductory period, the APR will rise to a higher level.

Fixed Rate Balance Transfers
A few credit cards offer a fixed APR on balance transfers for the life of the balance. With this type of offer, the APR attached to transferred balances will not rise after an introductory period. Instead, the APR will remain constant on that portion of your balance until it is paid in full.

Which type of balance transfer is right for each person depends on many factors. In some cases, transferring a balance to a 0% APR introductory offer can be the right decision - especially if the cardholder plans on paying off the balance within the specified introductory period.

In other cases, transferring a balance to a credit card that offers a fixed APR may be the right choice. Even though the APR attached to this type of offer is usually higher than that of introductory rate offers, the stability of the fixed rate can turn out to be a nice feature for the cardholder. With fixed rate balance transfers, it is not imperative that the cardholder pay off the balance within a predetermined window of time in order to avoid be hit with a rising APR and higher interest charges. A fixed rate can give a cardholder a lot more flexibility in repaying a balance.

Compare the latest balance transfer deals now or visit our credit card tips and advice area for more information about credit card balance transfers and/or fixed APR credit cards.

Posted in Credit Cards, Personal Finance

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This entry was posted on Saturday, September 15th, 2007 at 10:31 am and is filed under Credit Cards, Personal Finance. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.