The following is a guest post.
I’m a firm believer that you can make good money by using a credit card if you use it wisely. There are many different rewards card that offer great cash back options. You can also try to make money using a credit card balance transfer.
What Is A Balance Transfer?
A credit card balance transfer is just like it sounds, you move money from one credit card account to another. Usually one credit card will offer you an incentive to move, and they will provide you with a “balance transfer check”. You simply use that check to pay off your current card, and the balance is now on the new card.
Risks of a Balance Transfer
A balance transfer usually has many strings attached, so make sure you read the fine print. Some cards charge fees for each balance transfer. Most are flat fees, but some can even be a percentage of the amount you are transferring. Make sure you understand what you will pay if you are considering doing a balance transfer.
Second, many cards usually charge a different interest rate on balance transfer amounts. So, while they advertise one interest rate for purchases, you usually need to check the fine print to discover the balance transfer rate.
How To Make Money
After reading about the fees, you may wonder how you can make money by keeping a balance on a credit card? Well, many credit cards offer really good interest rates on balance transfers – such a 0% for a specified period of time. If you are a new card customer, they usually also waive any fees associated with the balance transfer. As a result, you can have a free transfer to a card that won’t charge you any interest – that’s a good deal.
To make money, you have to be smart about it, and you have to have good timing. The goal is to use the money at 0%, and put it in a savings account earning 1-2%. You can do this by using your existing card’s cash advance, put the money in an account, and use a balance transfer check to pay off the card. Now, your credit card balance is 0%, and you have that money in savings. When the 0% is up, use the savings to pay off the card.
