A no fee balance transfer credit card allows the consumer to benefit from a low rate of interest for an introductory period. Whilst this promotional offer is designed to lure new customers from competing financial institutions, 88% of banks charge a transfer fee and profit from the transaction. It may come as a surprise to discover that, according to a recent study by the Pew Charitable Trust, just 25% of credit union credit cards impose a fee for performing the exact same transfer. They offer members more competitive terms because they work don't operate for profit and work for the best interests of their members.
No Fee Balance Transfer Credit Cards
Many consumers choose an interest free credit card in order to reduce debt more quickly. Interest avoidance ensures that a higher percentage of each payment goes towards clearing the outstanding balance. The majority of banks typically charge a transfer fee of about 4%. Taking advantage of a credit union credit card means that each member is able to benefit from the full interest saving. It is important to check to see if a fee will be added to the balance following the transfer as each credit union is a completely separate entity and has its own policies.
Reduce Debt with an Interest Free Credit Card Transfer
A no fee balance transfer credit card means that the full payment will go towards clearing unpaid credit card debt. For example, Mrs Smith has a $10,000 balance accruing interest at 15% APR. This means that she will pay $1,500 of interest in just 12 months. Pay back 2% of the balance ($200) each month and just $75 will go towards reducing any unpaid debt. Assuming no further transactions, the new balance would stand at $9,100. However, a credit union credit card would have meant that the new balance was just $7,600.
Why Take Out a Credit Union Credit Card?
A no fee balance transfer credit card helps a member to enjoy all the benefits of a low rate of interest without an initial increase to the outstanding balance. It is then possible to reduce debt more quickly. Should the borrower encounter financial difficulties, a credit union is likely to be far more understanding than a bank. This is because they don't operate for profit so are far more sympathetic the personal circumstances of their members.
Sources
Willis, Gerri. (30 December, 2009). "Credit unions duke it out with banks." CNN Money.
Asa Ghaffar - Asa has over 10 years of practical experience in loan approval, secured lending, bad credit repair, stock trading and debt management.
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