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Fixed APR
Balance Transfer Credit Cards: The Long Term Approach to Saving
Money on Interest
0% balance transfers offer great
short term savings, free up money to pay down debt quicker, and
can ultimately save consumers hundreds, if not thousands of
dollars in interest over their duration. However, the very best 0%
balance transfer offers on the market only last 15 months. For
many, this is not enough time to completely eliminate their credit
card debt and they are faced with a decision: pay the new regular
interest rate or transfer their balance again. For most, a fixed
APR balance transfer credit card never enters their mind. However,
this balance transfer offer is often the best option for many
credit card users.
First, let me explain a 0%
balance transfer worst case scenario. An acquaintance of mine
thought he could save a few thousand dollars in student loan
interest by transferring his balance to a 0% APR credit card. The
student loan had a fixed APR of 7.99%. He figured he’d save $1600
the first year on his $20,000 loan, then transfer the remaining
balance to a new 0% APR credit card the next year.
What he didn’t realize was that
its not always that easy to get approved for a new 0% APR credit
card year after year, especially when you have a high amount of
credit card debt. When it came time to transfer the $18000 left on
his credit card, he was only able to get a $2000 0% balance
transfer. He was stuck with $16000 of credit card debt with a 12%
interest rate and the clock was ticking on his other $2000 in
debt. Instead of a comfortable fixed APR of 7.99%, my acquaintance
got stuck in a credit card nightmare.
Fixed APR balance transfer credit
cards provide consumers with a much better way to pay down long
term debt such as student loans or car loans at a set interest
rate. Currently, some credit card companies are offering fixed APR
credit card rates as low as 3.99% for the life of the balance. A
rate such as this is lower than many student loan and car loan
rates, and can provide consumers savings of 3% or even 10% on long
term debt each year.
A fixed APR balance transfer is
also a good option for individuals with high credit card debt
considering a second mortgage to pay off their high interest
credit cards. For example, a 4.99% Fixed APR may be lower than a
second mortgage’s interest rate and it wouldn’t involve costly
refinancing fees. More importantly, however, is the fact that a
fixed APR balance transfer doesn’t remove equity from your home.
0% balance transfer credit cards
offer consumers great short term savings. In the long run,
however, a fixed APR credit card provides a viable, interest
saving option for those looking to reduce higher interest loans
and credit card debt over a period of more than 12 to 15 months.
Imagine how much better off my friend would be if he transferred
his $20000 balance to a 4.99% Fixed APR credit card instead of
getting greedy with 0% APR credit cards.
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