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Most American banks, being aware of the typical spending habits of the American population, have realized that more often than not, people tend to max out their existing credit cards. Which is why the balance transfer credit card has become so popular in the first place! Simply put, a balance transfer credit card is one in which, when you sign up, you transfer the balance from your old credit card to the new one. At a preferential rate of interest that is. For unless the interest rate is lower, there is no incentive for you to take up a balance transfer credit card is there? And why do the banks give out such apparently self-defeating balance transfer credit cards? The answer is quite apparent. There is far too much competition in the existing credit card market and the margins are painful. More importantly, with a balance transfer credit card, the new bank can not only get your loyalty, but also any future spending that you do on the new balance transfer credit card.

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