Charge card Balance Transfer Mistakes to prevent – Credit Sesame
A balance transfer is definitely an chance to transfer debt from a higher interest loan or credit card to a a low interest rate credit card. What could be better than saving cash, right? Well, as everyone knows, credit cards would be the kings of fine print, so when it comes to balance transfers, reading the fine print makes all the difference between saving tons of cash or being hit with a lot of fees.
- Watch for the Balance Transfer Fee
Balance transfer credit card promotions that do not incorporate a transfer fee are about as fashionable as unicorns. The most crucial detail when examining balance transfer fees is whether or not there is a fixed fee or a fee based on a percent of the balance. A fixed fee is preferable because with regards to percentages, three percent may seem like nothing, but during the period of thousands of dollars, can also add up to and including lot of cash. Some percentage-based fees possess a cap-note that. Then do the math. When the fee is much more than you'd save in interest, maybe it's not such a great idea to go with a balance transfer card offer.
- Using the Card for Other Payments
So, you have this great new charge card that you've transferred your balance to, as well as their introductory no interest offer on that balance can last for months. Great, right?! Well, not if you are using the card for other purchases. More than likely, those purchases won't be at the introductory rate, and they'll wallow in it, accruing interest until you've paid off your no-interest balance transfer. By directing your instalments to go towards the lowest interest-based debt first, credit card companies can continue to make lots of money even on small purchases sitting on the bottom tier.
- Sky-High Rates Following the Promotion Ends
Consider the rates when ever the promotion-period on your balance transfer ends. Are they greater than those you're already paying? This might not be a great deal, unless you can pay off your balance transfer during the promotional period. Also, be aware of the interest rates for money advances along with other purchases. If these are similar to the credit card you have, great. But when they're much higher, proceed with caution.
- Missing a Payment
This is a big no-no when you are taking advantage of a minimal introductory rate balance transfer credit card, since even one missed payment can negate the introductory rate and send your transfer towards the default interest rate, which might end up being 25% or more.
Take home lesson: Pull out the magnifier and browse the sale carefully. It could mean the main difference between saving a bundle, or getting blindsided.