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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%!


 

 

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