Balance transfer credit cards are being used by consumers for debt consolidation due to the fact that rates offered on these cards can be affordable during a period which may allow cardholders to pay off various sources of debt when this balance transfer credit card is properly used. Reports over the past weeks have shown that many credit card lenders are offering low introductory rates on these balance transfer cards, but consumers must take care before acquiring one of these balance transfer opportunities or consolidating debt with a new balance transfer card.
Advisers often point out that rates will increase even though consumers may see a low introductory rate or even a 0% interest balance transfer option on a new credit card. Obviously, there have been consumers who were able to transfer multiple debts onto a new card, where a 0% introductory rate was offered, and these men and women were able to pay off their balance before the introductory period ended and while this is one of the main attractions to new balance transfer card offers, advisers want consumers to be sure of not only the benefits of these cards, but the risks as well.
According to resources like Bankrate.com, interest rates on these balance transfer cards will, obviously, vary from one lender to another and averages could be as high as 20.99% or more depending on the card and the borrower. While there are options for balance transfer opportunities to consolidate debt for both traditional borrowers and even some for cardholders who may have a low credit score, consumers who are looking into these balance transfer options must make sure they understand that the balance transfer card’s interest rate will eventually increase and, for those using these cards to consolidate debt, proper planning must be used.
There have been indications that more lenders will offer a great deal of credit card opportunities in the coming months, and throughout 2011, but even though lending practices may be loosened, there are still hazards that may be faced by cardholders who do not monitor their interest rate on these balance transfer cards. The CARD Act has prevented credit card issuers from suddenly increasing interest rates on cards, but these introductory rates are, obviously, only for a short period of time and if a consumer has a high amount of debt on their card, which they are trying to erase after transferring various balances, this could be problematic and cause overall costs to increase.
Yet, consumers who may be able to benefit from these credit card balance transfer offers do need to compare and contrast various offers from numerous lenders so that the most affordable card can be found for a consumer’s particular situation and needs. Looking into fees to transfer balances, the introductory period’s timeframe and what rate will be associated with the card after this intro has ended, not to mention the ability of a cardholder to erase a consolidated sum on this card if they are planning to consolidate debts, are all factors that must be weighed by the cardholder before making a decision or entering into any sort of credit card agreement.