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Should I Take Advantage of a 0% Interest Rate Balance Transfer?

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We’ve all received those tempting offers from credit card companies offering a 0% interest rate on balance transfers. Sounds enticing, doesn’t it?

Well, credit card companies are betting on it. Don’t get me wrong – 0% balance transfer offers are a potentially excellent credit choice; but they may also come with terms and conditions that could turn around and bite you if you don’t stay on top of things.

How do they Make Money?

It only makes sense that a credit card company can’t make anything off of customers who take advantage of 0% interest rate offers, right? Wrong! The credit card company is betting on the fact that the majority of credit card holders will be unable to pay off their credit card balance during the 0% promotional rate. In other words, the credit card company may not make anything off of the credit card holder at first, but it is only a matter of time before they start making money.

How Long does the Promotional Rate Last?

Which brings me to the next point: 0% credit card balance transfer rates are rarely for the life of the loan! Upon further inspection, you will find that most credit card balance transfer offers are only good during a short, promotional period, which is typically between six and 12 months. At that point, the credit card’s interest rate will likely significantly jump.

In fact, some credit card companies may raise interest rates upwards of 18 percent once the promotional rate has expired. And this is where reading the terms of the credit card balance transfer offer becomes so important.

There are many credit card holders that accept 0% balance transfer offers, only to ignore the length of the promotion. And then, before they know it, they have been paying a 15 percent interest rate on their large balance!

What about Balance Transfer Fees?

Many of us are so excited to receive a 0% balance transfer offer that we automatically accept the offer without looking further into it. The two things that you should take special notice of include the interest rate once the promotional rate has expired, as well as the balance transfer fee.

Huh? A balance transfer fee? Yep, this is another way credit card companies make their money. Many companies charge a fee to transfer a balance, and this fee often ranges between one and three percent of the balance of the transfer.  Most credit card holders find that this fee is reasonable, considering the money they will save on interest rates, but it is definitely something to look further into when accepting a 0% balance transfer offer.

The bottom line with 0% balance transfer offers is that they can certainly prove beneficial to credit card holders who carry a balance on their cards. However, it is still important to work hard and pay off the debt as to avoid future finance charges. Check the balance transfer’s terms, including the promotional rate and the balance transfer fee, so that you can make the most informed decisions regarding your credit.

Have you Considered a Small Business Credit Card?

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We all know that credit cards play an important role in our day-to-day living. It should therefore come as no shock that small businesses rely heavily on credit from time to time.

Bridge the Income Gap

Many small businesses use small business credit cards to bridge the gap between income and expenses. A revolving line of credit is important for many small businesses or start-up businesses, as this enables the company to continue operating the business, even when cash flow is an issue.

Search for a Low, Fixed Interest Rate

Small business cards are similar to traditional credit cards, as the credit card balances are subject to interest charges; therefore, it is extremely important for small business owners to shop around and find a small business credit card with a low, fixed interest rate.

Take Advantage of Online Tools

Small business credit cards may also prove useful to small business owners who want to track their weekly, monthly and yearly spending. Most small business credit cards offer a myriad of online tools to help small business owners track expenses. In addition, year-end account summaries are also very useful, as they enable small business owners to see the overall picture regarding their yearly expenditures.

Protect yourself Against Credit Card Theft

Like traditional credit cards, small business credit cards feature protection against fraud or credit card theft, as well. For many small business owners, the ability to check the account online is important, as they can monitor the account on a weekly – or even daily – basis to ensure that there are no unapproved charges on the card.

Include Additional, Authorized Users to the Account

Small business owners can also add certain employees to the account, thereby enabling them to purchase supplies when needed. And, because all expenses are tracked and accounted for, the small business owner does not need to worry about frivolous expenditures. For many small business owners that rely on employees to make purchases and order supplies, this account feature may prove extremely beneficial.

Keep Business and Personal Expenses Separate

For many small business owners, it may prove useful to separate business expenses from personal expenses, so it may be a good idea for small business owners to obtain a small business credit card and use it solely for business expenditures, thereby eliminating the problem of confusing bookkeeping.

Facts about Secured Credit Cards

Credit Card Types

Credit cards are a convenience that many Americans have come to appreciate. However, given the financial crisis and the looming recession, many once credit-worthy Americans are now struggling to re-build their credit after difficult financial times sidelined their credit score and their ability to obtain credit.

For those of us who are struggling with our credit worthiness, secured credit cards may be the answer. It is important, however, to educate ourselves on both the advantages and disadvantages of secured credit cards before applying for one.

How Secured Credit Cards Work

A secured credit card is essentially a credit card with a security deposit. The credit card works in a similar manner to a traditional credit card; however, the credit card holder must first deposit money into a special account that is equal to 50 to 150 percent of the card’s credit limit.

The credit card holder then uses the credit card as he or she would any standard credit card, and pays the bill in a similar fashion. The only difference is that the creditor has a cash reserve to pay the credit card should the cardholder default.

As the cardholder continues to pay the card every month and make responsible purchases, the creditor may raise his or her credit limit. For cardholders seeking a higher credit limit, the creditor simply requests a larger security deposit.

Establish and Spruce up your Credit Rating

For those consumers with little or no credit, or for those with a poor credit history, a secured credit card may be the ideal solution for rebuilding credit. A secured credit card provides consumers with the opportunity to show creditors that they are working towards a more financially sound future.

A secured credit card enables anyone of legal age to establish a credit history; therefore, they are ideal for young adults who have no credit history. Others who may find secured credit cards to be useful are those in bankruptcy or those who have had their bankruptcy recently discharged.

Establishing a credit history with a secured credit card may very well be a responsible step towards a better financial position.

Disadvantages to Secured Credit Cards

While there are few disadvantages, it is important to remember that secured credit cards typically carry a high interest rate, although for many consumers with poor or no credit, this is often an accepted trade-off.