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Credit Card eZine - News and Articles about Credit Cards

Credit Card eZine - News and Articles about Credit Cards

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Millions of New Credit Cards

Thursday, January 17, 2008

Credit card companies can expect more balance transfers this year. According to the latest research, up to 2.6 million of people, who have debts on their credit cards, will apply for new cards. They will attempt to transfer their credit card balances during 2008, 7% of them are planning to move their debts in January. Young people are most likely to change their credit cards: 13% of 25 to 34-year-olds will transfer existing credit card debt during January to take advantage of 0% introductory APR.

It is good to find out that people are taking action to adjust their credit bills. They don't simply add their Christmas expenses to their existing debt but make steps to save on borrowing costs and pay off the debt in full.

Switching to a new credit card is a good way to control your debt because many credit companies offer an interest free period to new customers that can last up to 15 months. This can be especially welcomed in January when people receive their credit bills after the Christmas shopping spree and they are higher than expected. Balance transfer also allows you to unite debts if there are more than one credit card. It's important to check if the card limit is high enough to accumulate all debts.

It is necessary to notice that approximately 6.6 million of people will still keep their existing credit cards with often higher interest rates - 16.82% at the average. The reasons why they stick to their credit cards are the following: first of all, people see a new balance transfer credit card as an additional source of debt. Some customers are afraid to hurt their credit history. Then, some people are just used to their cards and don't want to get a new one. All these fears are vain if the customers learn attentively the terms and conditions of balance transfer deals and keep in mind the fact that the goal is actually to pay off the debt in full.

The research also showed that 72.5% of all standard credit cards now offer 0% balance transfer credit card deals. It is always important to read the fine print because there is usually a balance transfer fee - a one-time payment charged for the service which could be up to 3%. So if a customer wanted to transfer ?2,000 it could cost him/her ?60. On the other hand, this is still often more profitable than keeping the balance on existing credit card and paying a higher interest rates. It is always wise not to make purchases on the card from which you have transferred a debt because your payments go towards the transferred balance first, leaving you to pay interest on your credit card purchases as long as you have any debt remaining.

In order to use a balance transfer you will need to qualify for balance transfer credit cards. The keys factors to determine if you get approved or not are your credit score and your income level.

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