When fighting wildfires, firemen start a controlled fire against the front of the existent one to put it out. Similarly, you can get rid of your mounting credit card debt by opening a low interest credit card and transferring the balance of your other credit cards on it. Provided that you have been a good payer to your creditors, you should not have any problems qualifying for a good balance transfer deal. Here is what you should be looking for.
The companies that offer balance transfer deals always give a grace period to their new clients once they accept their credit card debts. Given an average annual interest rate of about eighteen percent on most of the credit cards issued in the United States and Canada, the companies dealing with balance transfers offer their clients a preferential interest rate of about 8 or 8.5 percent for the first six months of their contract. Some can even offer a zero percent interest during the grace period, and it is just what you should be looking for. But that’s not all, some balance transfer companies are so generous that they can offer to extend your grace period up to one year. One year, during which you will be paying off just the principal of your credit card debt, and there will be no interest at all. That’s what I call great news!
Needless to say, this will help you wipe out a considerable amount of your credit card debt. You can hop from one balance transfer into another once the promotional period expires, until you get rid of all your credit card debt without paying a single cent on interest charges. However, you should close your old account whenever you sign up for a new balance transfer.
You should also read the fine print at the bottom of your balance transfer contract, as to avoid possible underlying catches. One of the most common traps is a transfer fee of up to a certain percentage of the transferred balance. The larger balance you transfer, the more you will have to pay in transfer fees. You should also bear in mind that some balance transfer companies charge substantial annual membership fees and joining fees.
The largest and most popular issuers of balance transfer cards in Canada are PC Financial, MBNA, Capital One, and Citibank. Here are some of their hottest offers.
With just 1.99 percent interest for the first six months, MBNA’s Pharmaprix Optimum MasterCard® Credit Card and Shoppers Optimum MasterCard® Credit Card are a reasonable choice. For comparison, the lowest promotional interest rate on the balance cards of Citi and Capital One is 5.90 percent and is valid just four months. After the grace period, the annual interest rate on all credit cards increases to over nineteen percent. Capital One’s Gold MasterCard is by far the most expensive balance transfer card you can apply for, with a promotional annual interest of 11.90 percent for the first three years. The good thing about it is that the interest on purchases you make is also pinned at 11.90 percent for the first three years.
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