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Fixed APR Balance Transfers: Better Than A 0% APR
By: Jeff Weber
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 3.99% 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 3.99% fixed APR credit
card instead of getting greedy with 0% APR credit cards.
©2006 Credit Card Depot Inc.
About the Author:
Jeff Weber is President & CEO of Credit Card Depot Inc. His primary website,
www.credit-card-depot.com, has covered the credit card market for over
two years, providing consumers with detailed credit card information and links
to online credit card applications. Over 40,000 individuals visit Credit Card
Depot each month. |
