A Few Facts About Balance Transfer Credit Cards

If you are one of the millions of Americans in the United States chances are, you know what a credit card is. However, for those of you who are not quite acclimated to the charge card industry, credit cards are plastic cards that are issued to people by banks. These plastic cards have a magnetic strip that contains information attaching the credit card to the account holder. When consumers use credit cards for purchases, the purchase totals will be added to the total amount due to the bank by the consumer. The banks make money off of the charge cards by adding an APR and annual fees to be paid by consumers. However, lately the big credit card hype has been about balance transfer charge cards.

Balance transfer credit cards work just like regular credit cards. Consumers can apply for these accounts and if approved, they will receive a balance transfer credit card that they can now not only use for purchases but now for other balances owed. There are several benefits to balance transfer charge cards adversely, there are a few things that consumers should beware of when looking into a new balance transfer credit card.

Benefits of balance transfer credit cards:

Promotional interest rates: Because of the overwhelming amount of competition in the charge card industry, banks that offer balance transfer charge cards have been forced into offering a promotional annual percentage rate. Promotional interest rates are low interest rates that start the day the people open the credit card accounts to the end of the introductory periods (usually between 6 and 18 months). In most cases, these introductory interest rates are 0% which really gives people a bit of leverage for the first few months of opening the balance transfer charge card account.

Rewards: Another great benefit to having a balance transfer charge card is the rewards offered. Remember above where I mentioned that overwhelming competition in the charge card industry forcing banks to offer lower interest rates? Well, it's this same competition that has brought about rewards in the charge card industry. Because just giving people a lower annual percentage rate wasn't enough to attract enough consumers to charge card products, several banks have decided to incorporate rewards programs into their balance transfer credit card products. Fortunately, many of these banks offer a wide variety of rewards that allow Americans to maximize on the benefits provided through their charge cards.

Beware of:

Annual fees: Because balance transfer credit cards offer so much to consumers by way of low interest rates and rewards, the annual fees for these types of charge cards will generally be a bit higher. Before Americans apply for new balance transfer charge cards, it's important that they are aware of and agree to the annual fees involved.

Interest rate: Many Americans who research balance transfers are getting trapped by a low promotional interest rate without looking at the future APR for the charge card. Before consumers apply for any new credit card, they should be aware of all interest rates associated with the credit card including promotional interest rates, balance transfer interest rates, cash advance interest rates, purchase interest rates, ect...

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