Foreign borrowers have little use of “cash” loans so popular among Russians – for all the payments they use the credit cards and with their use generally occur most questions from those of our citizens who work, study or went abroad forever. Moreover, the specificity of credit cards (and credits in general) in Europe or the States is very different from the loan “plastic”, to which the Russians have become accustomed.
For example, to such a question as refinancing we come only in respect of mortgage loans, and Russian banks do not give the possibility to change the conditions on most of the current credit agreements. Abroad, the credit organizations approach the issue of debts very differently, believing that even the other bank of the debtor can be converted into a grateful client, offering it the opportunity to consolidate debts (combination of multiple loans into one, and often at a lower interest rate). To “transfer” debt from one bank to another in Europe can be even by a credit card – this procedure is called a balance transfer.
How does this happen?
In order to “transfer” your debt balance to another bank, you will have to open a new credit card and using it repay your old debt. This service has been popular among Europeans, not only because it makes it possible to change the current conditions of use of credit card to more profitable, but also for another reason. The fact that European banks are seeking to survive as credit card issuers, vying with each other offer “newcomer” customers an introductory promotional interest rate – a period of one to six months, when on the money used is charged a minimum percentage, and in some banks this fee may even be 0 %. For the fact of the transition, banks typically do not charge a fee, and in order to use the service you will need only your e-mail address and a valid social security number.
Why do you need it?
In Europe credit cards are a fairly extensive business segment for banks. This “plastic” – is the main source of their income, so the desire to attract as many cardholders as possible is understandable. For these same borrowers, such a procedure becomes a great opportunity to get a respite for payment by credit card. Even if we consider that the interest rates on credit cards in the European average is 16% per annum (how can we not recall the “domestic” 25-27%), with such sums that the average European should give banks on the cards, it is a significant burden on the budget. Therefore, balance transfer is an excellent way for a certain period to return (now to a new) bank funds at a reduced interest rate, which ultimately translates into a decent save.