Credit cards balance transfers made to new credit cards which have a 0% initial interest rate can be beneficial in 2 typical ways. One approach can save you a lot of money on existing debt, and the other approach can make you “free money”!
The first of these methods is ideal for those who already have borrowed money from such things as other credit cards or store cards etc. What you do is you move such borrowing onto the new account, thereby avoiding having to pay any interest at all for the initial period. This can be a huge improvement as the monthly repayments can be used to reduce the amount of the borrowing itself rather than just paying off the interest each month.
The second of these methods is to use the money available on the new account to put into an interest-bearing savings account, and thus accumulate a profit due to the interest you receive. Sometimes such approaches have been used for more risky investments such as new businesses. With about 90% of all new businesses failing this is of course extremely risky and should usually be avoided if possible.
Financial progress can be made using either of these two approaches. However one needs to be careful to check all details. For example sometimes the 0% initial interest applies only to purchases.
The period of zero interest can sometimes be different among different cards and might even apply differently to different categories of transactions.
Sometimes cash advances are treated differently. A different interest rate might be applied to cash advances and it might be applied from the date that the cash is obtained (not at the billing date as with purchases). Also it is sometimes the case that repayment monies are first applied to all other balances before starting being applied to the cash advance balances.
It is wise to carefully check all the details of a card and make sure you understand them well before you consider obtaining a new account.
Credit cards balance transfers can be of great benefit if used carefully and wisely so see how they can help you.
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