12 Month Balance Transfers

April 5th, 2011

12 Month Balance Transfers

When financial times are tough, it is easy to find yourself carrying a balance on your credit card accounts month to month and those balances can make things even worse. Credit cards can be a very convenient way to manage your money but more often than not they become overloaded leading to increasing interest payments and potentially, financial ruin.

If you find yourself in this position, struggling to make even the minimum monthly payments you are not alone! Many of us are in the very same position. Rescue is available however and could come in the form of a 12 month balance transfer account. You may be curious how they work or if they are the right solution for you. Take the next few minutes go find our more about these important balance transfer options.

What Is A 12 Month Balance Transfer

It may not seem like it but credit card lenders are in a fierce competition for your business. They need to add customers to their rolls every month. That is why they offer incentives to their customers. One very popular incentive is the 12 month balance transfer option. This feature will allow borrowers to transfer the outstanding balance from their other card or cards to their new account.

Now, you may be asking why you would want to get a new credit card when your existing cards are already causing your such trouble. The answer is simple actually. With the balance transfer option offered by lenders, you often get a very low interest rate, perhaps as low as zero percent interest per year! This means you can transfer the balances from the other cards and pay them back with no interest. You save tons of money!

Okay, I hear your next question. Why would the bank or credit card company let you pay back a balance with no interest? Again, the answer is quite simple and yet frustrating. The new lender is taking a gamble that you will not pay back the full amount of the balance transfer in time and they will be able to charge interest down the road.

Your new lender also knows that you are very likely to use your credit account to make new charges. Of course each offer is different, but most balance transfer offers will take the opportunity to charge a different, much higher interest rate on new charges.

Now there are literally hundreds of offers that include a transfer option, your job now is to find the one that is best for your financial lifestyle and needs. This article deals specifically with the 12 month balance transfer option but there are many others from three months to open ended.

To clarify, these terms refer to the amount of time the borrower has to pay off the transferred balance before interest charges kick in. In most cases, you will want the longest payback period with the best terms. In some cases however, a shorter payback period may be just the motivation you need to help get your financial affairs in order.

How to Find The Right Balance Transfer Offer

There are probably hundreds of offers on the market for credit cards that include a balance transfer option. In fact, most credit card lenders will be happy to add a balance transfer option to any of their accounts if you just ask. As stated earlier, there is much to gain for them and little to lose.

To find the best 12 month balance transfer option, start by deciding what features and / or benefits you want from any card, not just a transfer account. For example, if you travel, a rewards account may be of interest to you. Choose a card with a very favorable interest rate.

Take a look at the annual fee charged by the cards you are interested in. No every lender will waive the fee if you ask them, but they certainly won’t waive the fee if you don’t ask. You should also be aware that some lenders and banks will charge a fee for receiving the transferred balances. Not all companies charge such a fee so be sure to ask.

Now that you know what you are looking for in a credit card, begin to evaluate the cards with a  balance transfer option. If none of the transfer cards offer everything you are looking for, you should still consider calling the lender and asking for the terms you want. The worst that could happen is they will say no.

Once you know the details of the offer you are interested in, complete an application for the account. Keep in mind that this should happen late in the game and you should not submit too many applications as each application will appear in your credit history and could actually prevent you from being approved.

Making the Most of the Transfer

Now that you have decided on a card, applied and been approved, it is time to make the transfer. While this may sound like a silly thing to mention, many consumers get a transfer option on their card then do not act in time to take advantage of it. Almost every balance transfer accounts will impose a time limit during which you must make your transfer. Don’t miss it!

With your balance safely transferred to your 12 month account, its time to get busy making payments. You will feel a sense of relief almost immediately as the numerous payments are now consolidated into one and it may leave you with a feeling that you have more money to spend. You should apply those funds to your outstanding balance first and make sure you can pay it off within twelve months.

It will also be a good idea to close most if not all of the other accounts as soon as they are paid in full. Otherwise, you will be tempted to add new charges to those cards, perhaps the worst possible situation you could find yourself in. If you believe you have sufficient will power to stave off future needless charges, keeping one account open will afford you some comfort should an emergency arise.

So now you are well on your way to financial security having opened your 12 month balance transfer credit account. Best of luck!

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	Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Cash Advance Rate (p.a.)
HSBC Credit Card	17.99%	0% for 6 months with 2% handling fee	$0	21.99%