A balance transfer credit card is a credit card account opened for the purpose of transferring an outstanding balance from another credit card presumably at a very low or 0% interest rate.
Some instant approval credit cards offer introductory balance transfer rates that are every bit as competitive as the best in the marketplace including 0% balance transfer credit cards.
There are two main types of low interest rates, the introductory low interest rate and the long term low interest rate.
The introductory low interest rate is an interest rate that has a very low interest rate for a set period of time, typically 6 months, 9 months or 12 months. The interest rate is usally relative to the period of time in some cases the interest rate on a 6 month introductory period can be as low as zero per cent. 9 month and 12 month balance transfer introductory rates tend to be a little higher between 1 and 3%.
The reason why credit cards offer these very low interest rates is because they spend a large amount of money marketing to people to take on their credit cards on a long term basis. Some credit card companies have found that introductory interest rates can do the same thing for less money.
An introductory interest rate will be very low for a period of time and will then go to the default interest rate on the card. This will sometimes revert to the variable interest rate for purchases and on other cards it will revert to the variable interest rate for cash advances. The cash advance rate is generally much higher and often without interest free days. This is one of the most important details to check before applying for a balance transfer credit card; instant approval or otherwise.
There are some people who go from one low rate balance transfer credit card to another low rate card before the introductory period finishes. This means that they are able to borrow money at a low interest rate for a long time. However this approach requires a good deal of organisation and discipline and a better than average credit rating. It is possible to get an existing lender to extend the balance transfer period by calling the bank and telling them you are considering moving your balance transfer to another account. In many cases they will extend your balance transfer rate in order to keep your custom. It is much cheaper for a bank to retain you as a customer than acquire another.
There are longer term low interest rates for some balance transfers some even offer life of balance transfer arrangements. These cards will charge a higher interest rate than the introductory interest rates, but these will last longer in the case of life of balance transfer credit cards the low rate will apply for the life of the balance.
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