Credit Card - Part 2 (Balance Transfer)

It is almost half a year I wrote about credit card whether benefiting or harming the owner. Again as explained previously in earlier post about how a knife acts upon it's functionality, we must fully aware of the impacts.

Any of you heard of BT? Never heard this acronym? Hmmmm, how about "Balance Transfer"? Never heard but thinking have read somewhere in newspaper? Great! At least have sensed about it. Now worries for newbies about this jargon because this is not really high linguistic jargon. This is very simple terminology by it's definition where the remaining or full balance from somewhere will be transferred to somewhere else. Where exactly this somewhere? Any idea? Back to the title of this post, from credit card A to credit card B. Why exactly do they have this package in banking business? Do I care? Not really, I'm not even bother why they introduce because this is part of their products and they are free to do so. So, as a consumer or customer we must able to benefit whatever products they introduce into the market.

So, when can we use this BT? There are some criteria normally imposed by bank via this BT program where we may only can transfer certain amount as a minimum amount. First, we may utilize this BT program if we're stuck with cash of any amount to be paid to original bank of credit card A and to reduce the compounding interest. If this is the case, we may not really worry about the rate will be imposed by bank issuing credit card B because the rate will be much much lower than compounding interest from paying only minimum amount. Most of the banks normally have number of choices to choose on the BT plan; 3-months, 6-months, 9-months, 12-months, etc. The rate also may differ among the plan. Hence, choose wisely so that we can benefit at maximum level.

Other than previous scenario, we may have amount to be paid to bank of credit card A but we may want to invest that amount in some alternatives. In this case, any rate imposed by banks are not recommended because we'll be losing our money, unless our investment can give much higher return than rate being imposed by the bank. Let us assume for the worst case where our return not much and lower than any rate offered by bank and what would be the scenario we can consider? In this case try to get whichever plan gives 0% rate and this plan usually very limited and very occasional basis. 

So, we as a consumer or customer always right and try to utilize the maximum possible so that we benefit whatever products being promoted by banks. Banks may have hundreds of strategies to create profit, similarly we create hundreds of strategies to benefit from their own products.