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Credit Cards
Credit Card
Basics:
-Credit
Card Benefits
-Glossary
-Applying
for
the Right Card
-Card
Offer Pros & Cons
-Cash Advances
-Balance Transfer Tips
-Smart Credit Card Use
-Going Over-the-Limit
-Credit Card Scams
-Delinquency Rates
-Paying Bills on Time
-Credit Card Insurance
-Fees
& Costs
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Card Guide
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Offers
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Credit Reports
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BALANCE TRANSFER TIPS
Transferring your high-interest balance to a card
with a lower rate can potentially save you a nice amount
of money, helping you towards the path of financial
freedom. However, you must proceed with caution when
looking to transfer because every credit card has
different terms and conditions. Below is information
that will help you avoid possible pitfalls when
transferring balances.
Make sure you know what the time
limits are!
Typical balance transfer offers only last for about
six or nine months. Once the introductory rate is offer,
the card will revert to a more standard rate, usually
between 15-20%. If you are not sure what interest rate
the card is going to be charging at the conclusion of
the intro offer, call the issuer and find out. A good
idea would be to keep a list of all the different rates
you inquire about so that you can easily determine what
card is offering the best deal.
Determine what the 0% or low
interest really means!
It is very common for credit card companies to offer the
low rates only for balances that are transferred from
other cards. This will help you eliminate your debt
quicker, and cheaper. However, it is important to
remember that any new purchases made with the card will
be charged a higher interest rate. In addition, any
payments that you make will be applied towards the
balances that were transferred over first, until they
are paid off. Therefore, new purchases are going to
result in you paying a great deal of money in interest
costs. A good idea would be to make sure that all of
your balance transfers are paid off before you start
making any new charges to the card.
Some credit cards work in a different
manner, applying the introductory rate only to new
charges made with the card. If you are not aware of
this, you will end paying full interest on your balance
transfer debt, defeating the purpose of trying to
eliminate the debt. Obviously these type of card offers
should be avoided when looking for a low rate balance
transfer offer.
Be alert of expensive fees!
Usually, credit cards are going to charge a
percentage when transferring balances from once card to
another. Typically, this charge is 4 or 5%, with a
$25-50 cap. However, it has become common for issuers to
eliminate the cap. As a result, you can end up paying
several hundred dollars when transferring $2000 or more.
Even worse, some issuers count this fee as a new
purchase and end up charging you are a higher interest
rate for this part of your balance. Therefore, you only
want to consider applying for a credit card that offers
caps on the fees associated with balance transfers.
Be aware of bait-and-switch
schemes!
You don't always get what you think you are getting!
For example, you apply for a low rate balance transfer
card. Your credit score is low, in the 500s. As a result
of your poor credit, the credit card company issues you
a card with higher rate, and no introductory offer. You
probably won't even realize the higher costs until after
your receive your first bill. Therefore, it is very
important that you read terms and conditions very
closely, before you transfer any balances, or make any
purchases.
Make sure you pay your bill on
time, every month!
Even if you are only one day late, you will lose
that zero rate! The second you are late, the credit card
is going to convert to the full rates. The instant you
are late a second time, your interest rate is going to
be increased as much as 30%! |
