Using Credit Card Transfers to Lower Repayments

Credit Card Loan Transfer

Credit Card Loan Transfer

Many people consider credit cards to be all alike. They understand that different credit cards have different interest rates but don’t fully understand that different cards have different abilities.

You can take a look at your own financial situation and tailor a credit card to match that situation. If you are a frequent spender, perhaps you should choose a card with high rewards and a 120 day no interest period for example. You can actually save a substantial amount of money to tailoring your credit card decision to your financial situation and spending habits.

One great way for maximizing the benefits of a credit card is to use the credit card interest free periods to reduce loan payments. A recent study found that more than 70% of credit card issuers will allow you to shift car loans onto their credit cards. A slightly smaller number even allow you to move the balance of mortgages, payday loans, businesses loans and student loans onto your credit card.

That means that you can potentially transfer an auto loan on which you may be paying a high interest rate, onto a credit card which may have as much as 18 months interest free. If you know you are in a position to pay the debt on time, this can potentially save thousands of dollars in interest costs.

The credit card issuer will pay off the debt you owe on the loan and in turn become the holder of the debt. With many new credit card applications you can obtain a credit card interest free or low interest introductory period – as low as 0% for 18 months – then the high interest rates start. So if you are certain that you can pay the debt off in the low interest period on the credit card, it’s a very useful feature. There is sometimes a transfer fee for this kind of debt going onto your credit card, but it’s generally low enough to still make the debt transfer beneficial.

An additional benefit with transferring an auto loan onto a low interest credit card is that the title for the vehicle is transferred to your name. Then you are able to re-sell the vehicle more easily and it can’t be repossessed like it might be under a delinquent auto loan.

The risk of course is that you fail to pay the credit card off in time and the low interest rates commence. Many people actually take out a credit card just for the purpose of lowering interest payments on an auto loan. If you don’t have a lot of discipline, simply cut the credit card up after you have transferred the auto loan onto it. Then you can rest assured that you won’t rack up other debt on it, and the only debt is the initial debt transfer.

You also need to investigate credit cards thoroughly to take advantage of a loan transfer. Does the credit card have a debt transfer fee? Does the credit card have a high minimum monthly repayment? Exactly how long is the low interest period and are there any conditions to continuing to obtain low interest? What is the full interest rate on the credit card after the low interest period?

Additionally you should be aware that your credit rating might also come into play when applying for these kinds of credit cards. If you have a hgih credit score you might be able to receive a much better deal. This method works very well for many people, but before you consider it, make sure you have the discipline to continue the repayments and get rid of the credit card once you have eliminated the balance owing.

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