Credit cards in the United Arab Emirates that come with a Balance Transfer facility can often seem like a really good option, particularly for those who are dealing with debt-related problems.
Using the Balance Transfer facility on a credit card can cut years off debt repayment and results in massive savings by having the balance from one or more high-interest credit cards transferred to one that comes with a lower interest rate.
However, there are disadvantages to making use of the Balance Transfer facility, as even a transfer that comes with a 0% interest rate can still result in more debt on occasion.
It is therefore important for customers to weigh up the advantages and disadvantages of making use of this facility before putting in an application for a credit card that comes with Balance Transfer.
One of the main advantages of the Balance Transfer facility on credit cards, and probably the primary reason why most people want them, is the lower interest rate.
Because the interest rate is lower and the finance charges are either negligible or even non-existent in some cases, the monthly payment made by customers can actually go to reducing their overall credit card balance instead of paying off the interest.
Another advantage of the Balance Transfer facility on credit cards in the UAE is the consolidation of all credit card debt onto the one single card.
Because the balances from a number of different credit cards can be transferred to the same card, cardholders are able to concentrate on just making one payment on one due date, which makes payments a lot easier to manage and keep track of.
Many people are dissatisfied with their current credit card and would like to change to a new one.
In the event that an existing credit card comes with issues such as few rewards or benefits, a high interest rate and a short grace period, the balance can be transferred to a better credit card, allowing users to then close their old account.
However, there are disadvantages to the Balance Transfer on credit cards, one of which is that a Balance Transfer fee sometimes has to be paid in order to transfer one card’s balance to another.
This fee can be anything from 3% to as much as 5% of the total transferrable amount.
0% interest is often only offered by Balance Transfer credit cards for an introductory period, which can be as long as 21 months or as short as six months.
If the cardholder is transferring a balance in order to pay off their debt more quickly, it is important that they are certain of their ability to do so before the end of the promotional period in order to avoid having to pay a higher interest rate again.
If the main reason for financial problems has not been addressed, users could easily end up in even more debt by owning yet another credit card.
The long-term financial consequences of using Balance Transfer therefore need to be considered carefully before making any final decisions.
