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How to Use a Low Rate Balance Transfer Credit Card
- Budget your income and start repaying your credit card balance
If you're reading this you've already made the first positive step towards getting on top of your outstanding credit card balance, so well done!
The biggest benefit of a low rate balance transfer credit card is that it reduces the money you are charged in interest, giving you a little head-room to get on top of your outstanding balance and begin paying it off.
Because most low rate balance transfer credit cards offer a low rate until you have repaid the balance in full, you can take your time and repay your balance at a speed that works for your finances.
Remember to budget your income so that you can repay a decent, but comfortable amount each month and start reducing your balance.
- Get a 2nd card for your purchases and cash transactions
Ideally, the best thing you can do with a low rate balance transfer credit card is to make use of the balance transfer offer and repay your balance quickly, but comfortably.
What you don't want to do however is use the same credit card for new purchases and cash transactions.
Why? Because purchases and cash transactions will be charged at the standard or a higher interest rate in the case of cash transactions. Also, your credit card company will allocate the payments you make each month to your lowest rate balance, namely your balance transfer, leaving any purchases or cash transactions you make to accrue interest until you have repaid your balance transfer in full.
If you need to make new purchases on credit you should get a second credit card that offers a low interest rate or even a cash back credit card if you will your keep your balance repaid in full each month.
Cash transactions are always best left to debit cards. However, if you do need to use a credit card, try and make sure the second credit card you choose for your purchases, also offers low interest rates cash transactions.
Make the most of your card...
- Transfer your balance as soon as you can
To make the most of your new low rate balance transfer credit card, transfer your existing credit card balance over as soon as you can, ideally when you apply for the new card.
Doing this will allow you to benefit from the lower rate of interest on your outstanding balance sooner, saving yourself a little extra in interest charges.
If you are unable to transfer your balance during card application, you can still do it once your account has been opened. There are various options available, including using the balance transfer slips sent out with your new card and online banking.
Compare low rate balance transfer credit cards
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