5 things to consider before a balance transfer

5 things to consider before a balance transfer

By: James Belle

Balance Transfer is an opportunity to pay off your credit card debt on a reduced interest rate or without paying any interest, for a given period of time. It is the most common perk credit card companies use to entice new customers.

It is a good perk too and many people take advantage of it to reduce their credit card balance or pay it all off. You may have seen your fare share of 0% balance transfer offers but as with most things, there are complexities and traps usually buried with in the details of the contract.

To make sure you get the most out a balance transfer, here are a few things you should consider:

1. How long does the rate last?
A 0% rate might look more attractive than a 5% one but if you consider the length of the offer, in some instances the 5% offer works out better; for example, if the 0% offer last 6 months and the 5% offer lasts for the life of the balance, the 5% offer is better unless you plan to pay off the balance within 6 months.

2. After the balance transfer fee, is it worth it?
It is common for balance transfers to incur a fee, normally 2 or 3% of the amount you wish to transfer. To work out whether it’s worth transferring; First calculate how much interest you would have paid on your current credit card over the balance transfer offer period, then compare it to the balance transfer fee. If the balance transfer fee is higher, then it isn’t worth transferring.

3. What are the conditions of deal?
Most balance transfer deals have conditions that would cause the credit card company to withdraw the offer, the most common one being; missing a payment or making a late payment on your credit card. Make sure you study all of them, and evaluate whether you can meet all of them.

4. What’s the interest rate for new purchases?
On some credit cards, although your transferred balance might not incur any interest charges, they would charge you interest on any new purchases you make with the credit card. If you don’t intend to use the credit card on a regular basis this issue will not matter.

5. What will the rate be when it changes?
After the balance transfer period is over, you can expect to pay some interest, but how much? If it’s too big a jump, plan on making another balance transfer just before that one comes to its end, or stretch your finances and pay it off within the offer period.

James Belle writes about personal finance, he has written tips on getting a credit card bad credit amongst many others.

Article Source: http://www.ArticleBiz.com

Current Account Mortgage

Current Account Mortgage

By: Daniel Spivey

There are different types of mortgages are available in the market. Current Account mortgages come with different features such as over and underpayments. Current account mortgages require financial discipline for them to work to your advantage and ultimately pay your mortgage off early. Current account mortgages are a type of flexible mortgage and they have been in the financial market for more than a decade. Current account mortgages work by combining your mortgage and current account into a single account. For example, under current account mortgages the balance in the account will be loan amount minus the credit amount in the account. The balance is calculated daily and the homeowner only pays interest on the balance. Any saved income in the current account at the end of the month is automatically deducted from the mortgage debt. If cash is allowed to build up in the current account mortgage, the savings on interest payments can be significant. Every time money goes into the current account, the amount of the overdraft reduced and every time you take money out, the overdraft increases.

Current account mortgages allow the interest charges on all borrowings, including credit card debt, to be at the cheaper interest rate of the mortgage, instead of the average credit card or loan rate. So money can be saved in the long run. There are different features with Current Account Mortgages. There are a wide range of current account mortgages in the marketplace. Different current account mortgages come with different features such as overpayments, payment holidays, underpayments and credit card and loan facilities. Some current account mortgages include a restriction on withdrawals, overpayments and underpayments and some include fees and charges, such as early redemption penalties.

In general, it is found that the flexibility of a current account mortgage is paid through a higher rate of interest than more traditional mortgages and because the lenders are also taking a risk with current account mortgages. They will make less money on the mortgage if it is paid early, or they might not get the money back if repayments are not paid. A current account mortgage works both ways and if you get it right, in particular the management of it, then it will benefit both the lender and the borrower. The downside with current account mortgages is financial discipline. Financial discipline and planning is needed to properly maintain current account mortgages and to be able to resist the temptation to use the large sums of capital available. The amount of debt visible on the current account balance, in the tens or hundreds of thousands, can also be intimidating to borrowers when viewed on a daily basis. Independent mortgage brokers and financial experts may be consulted due to the range of current account mortgages, and they in turn provide information, and the suitability for having a current account mortgage.

In a nutshell, current account mortgages combine the current account and mortgage into one account. They offer flexibility with options such as overpayment which can allow to pay off your mortgage quicker. Although current account mortgages are fairly new in the marketplace, their popularity is increasing as more home owners recognize the benefits they offer.

Looking for a new mortgage or remortgage quote? Visit OnlyStop.com for a great quote today!

Article Source: http://www.ArticleBiz.com