Credit Card Balance Transfer Information That You Must Have
Balance transfers from higher interest to lower interest credit cards is a very effective tool for reducing credit card debt.
However, you must be sure to read all the fine print in the credit card agreement to see that you are going to truly benefit from the transfer.
There are several pitfalls to look out for.
I am currently paying off my second $25,000 worth of credit card debt.
I am now down to about $15,000.
Both this time and the last time, I have paid very little in interest by transferring to lower interest rate cards, usually 0%, for periods of 12-18 months.
There are always time limits on 0% deals, but I have been able to lock in fixed rates as low as 2.
9% until the balance is paid off on some of my debt.
First you must comb through the offers you get in the mail and use the internet to do some comparison shopping on which credit card companies are offering the best deals.
From my experience, one credit card company is no better than any other.
They all have special offers at various times, so just go with the one offering the lowest rate for the longest time taking into account what the rate will go up to once the lower rate period ends.
Hopefully, you will be able to transfer the balance again if a better offer comes along.
Just make sure you look out for balance transfer fees and late payment penalties.
If there is no fee, this will usually be stated on the first page as it is a big marketing plus for the credit card company.
If it is not stated clearly that there is no fee than there usually is one.
Read the terms and conditions section where they must disclose the balance transfer fee.
A common fee that I have encountered is 3% of each balance transfer with a minimum and maximum listed, such as ($5 minimum / $75 maximum per transfer).
If there is no maximum listed, watch out, because if the balance you are transferring is big enough, you could be looking at hundreds of dollars just from the transfer fee.
Most credit card companies will penalize you for making late payments.
It could be a fee or you could forfeit the lower rate you had locked in.
In such a case the rate will usually shoot up to at least the regular purchase rate on the card if not even higher.
If the rate you are transferring to is not going to be fixed until the balance is paid off, definitely take note of what the rate will shoot up to once the lower rate period expires.
If you have a fairly good credit history, you will probably be able to take advantage of another balance transfer credit card offer before the rate on your current card jumps.
If you do this though, make sure you plan at least a month ahead to have time for the balance on your old card to transfer to your new one.
One frustrating situation that I have run into with some credit card companies on new credit card offers is that they want you to tell them how much your transfer balance is before they tell you what your limit will be on the new card.
Don't panic if this happens.
The worst case scenario is that some of your balance might not transfer, but hopefully you will at least get most of your balance onto a lower interest credit card.
Then you will just have to keep looking for another card to transfer your remaining balance to.
Finally, once you transfer a balance to a new credit card, set that card aside until the balance is paid off or you transfer the balance to another card.
Don't use it for purchases.
Another major pitfall that is easy to fall for is when the credit card company you transferred a balance to offers you something special down the road to entice you to charge purchases on the card.
This would be a big mistake, since credit card companies always apply payments against higher interest rate balances first, which also means your minimum payment would jump up.
However, you must be sure to read all the fine print in the credit card agreement to see that you are going to truly benefit from the transfer.
There are several pitfalls to look out for.
I am currently paying off my second $25,000 worth of credit card debt.
I am now down to about $15,000.
Both this time and the last time, I have paid very little in interest by transferring to lower interest rate cards, usually 0%, for periods of 12-18 months.
There are always time limits on 0% deals, but I have been able to lock in fixed rates as low as 2.
9% until the balance is paid off on some of my debt.
First you must comb through the offers you get in the mail and use the internet to do some comparison shopping on which credit card companies are offering the best deals.
From my experience, one credit card company is no better than any other.
They all have special offers at various times, so just go with the one offering the lowest rate for the longest time taking into account what the rate will go up to once the lower rate period ends.
Hopefully, you will be able to transfer the balance again if a better offer comes along.
Just make sure you look out for balance transfer fees and late payment penalties.
If there is no fee, this will usually be stated on the first page as it is a big marketing plus for the credit card company.
If it is not stated clearly that there is no fee than there usually is one.
Read the terms and conditions section where they must disclose the balance transfer fee.
A common fee that I have encountered is 3% of each balance transfer with a minimum and maximum listed, such as ($5 minimum / $75 maximum per transfer).
If there is no maximum listed, watch out, because if the balance you are transferring is big enough, you could be looking at hundreds of dollars just from the transfer fee.
Most credit card companies will penalize you for making late payments.
It could be a fee or you could forfeit the lower rate you had locked in.
In such a case the rate will usually shoot up to at least the regular purchase rate on the card if not even higher.
If the rate you are transferring to is not going to be fixed until the balance is paid off, definitely take note of what the rate will shoot up to once the lower rate period expires.
If you have a fairly good credit history, you will probably be able to take advantage of another balance transfer credit card offer before the rate on your current card jumps.
If you do this though, make sure you plan at least a month ahead to have time for the balance on your old card to transfer to your new one.
One frustrating situation that I have run into with some credit card companies on new credit card offers is that they want you to tell them how much your transfer balance is before they tell you what your limit will be on the new card.
Don't panic if this happens.
The worst case scenario is that some of your balance might not transfer, but hopefully you will at least get most of your balance onto a lower interest credit card.
Then you will just have to keep looking for another card to transfer your remaining balance to.
Finally, once you transfer a balance to a new credit card, set that card aside until the balance is paid off or you transfer the balance to another card.
Don't use it for purchases.
Another major pitfall that is easy to fall for is when the credit card company you transferred a balance to offers you something special down the road to entice you to charge purchases on the card.
This would be a big mistake, since credit card companies always apply payments against higher interest rate balances first, which also means your minimum payment would jump up.
