Get A Low Cost Loan By Using Balance Transfers By Joseph Kenny At Isnare.com Ezine Articles

Keeping interest payments down is a sign of good money management and credit card tarts have got it down to a fine art. Credit card tarts take advantage of 0% balance transfer deals to make sure they never pay interest on their credit card debt.

Credit Card Tarts

It works like this. The borrower applies for and gets a credit card that offers 0% on balance transfers for a fixed period. Usually this is six months to a year. The borrower transfers the existing debt on to the credit card and makes repayments as usual. Since no interest is being charged, all repayments are reducing the amount of money owed, which is good news for the borrower's long term financial health.

At least six weeks before the 0% deal is due to expire, the borrower applies for another 0% credit card and transfers the remaining balance on to the card. This means the borrower has another period of clearing debt without paying interest. This strategy can be repeated several times, though many credit card companies have got wise to it and are now charging balance transfer fees.

Low Cost Loans

This is a great strategy for people who are trying to reduce debt, but it turns out that it can also be used for debt-free people who want to get a low cost loan. To do this, borrowers need to find two different types of credit cards. Debt free people with a good credit rating should have little problem with this strategy.

First of all, the borrower will need to find a card that offers a low balance transfer rate for the life of the balance. There are several of these to choose from. Many of them also offer other incentives, so it is worth shopping around.

Second, the borrower needs to find a card that allows a fee-free balance transfer, as well as credit card cheques with a 0% interest rate. There are a few cards that meet these criteria.

Transferring The Balance

Third, the borrower needs to do a balance transfer from the low rate card to the 0% card. This means that the 0% card will be in credit. Finally, the borrower can write a credit card cheque from the 0% credit card and pay it into his or her current account. The net effect of this is a loan at a much lower rate than normal bank loans.

Even for people that don't need a loan, this can be a good way of making some cash, especially if they are able to stash the cash in a high interest account.

What About The Credit Rating?

One danger of this strategy is if borrowers make too many credit card applications in a short space of time. This can count against them in a credit file. It is also essential to make at least the minimum payments on the required dates to maintain a good credit history.

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