Credit cards balance transfers to new cards with zero interest rate are used in two main ways. One way can help you save money on other credit cards and the other way can actually make money.
The first approach is for people with balances on credit cards which are charging interest. If you transfer those balances to credit cards which charge zero interest (for an initial period) then you avoid having to pay any interest on those balances, so you can use all the repayments to pay down the balances themselves rather than paying any interest.
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, and 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.
Also, the periods of no interest can vary, and might even be applied differently to different types of transactions on the card.
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, it used wisely and sensibly can be of great benefit to a persons finances as this article has shown, so see how you can use one to your benefit, soon!
The first approach is for people with balances on credit cards which are charging interest. If you transfer those balances to credit cards which charge zero interest (for an initial period) then you avoid having to pay any interest on those balances, so you can use all the repayments to pay down the balances themselves rather than paying any interest.
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, and 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.
Also, the periods of no interest can vary, and might even be applied differently to different types of transactions on the card.
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, it used wisely and sensibly can be of great benefit to a persons finances as this article has shown, so see how you can use one to your benefit, soon!
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