5
Credit Card Balance Transfer Offer - What You Need To Know
Category: FinanceIf you’re looking to reduce your monthly debt payments and free up more cash, then a credit card transfer to a lower interest rate may be a good option. There are many different types of balance transfer offers available. The sheer number available can be overwhelming and sometimes just the thought of selecting the perfect one is daunting. The actual task can seem impossible.
To make this task a little less overwhelming, it helps to understand this type of card. It’s also important to know the different types of balance transfers available on charge cards.
How Does This Type of Card Work?
To begin to understand balance transfer credit cards, you need to know how they work.
The way this type of plastic money works is fairly simple. If you have a balance on one credit card, you can sign up for a new card and then transfer the original amount to it. Most charge card issuers are happy to accept your plastic debt from another company. They want your business and will make the idea of a money transfer as appealing as possible.
Low interest rates and rewards perks are some of the benefits used to entice new customers. But you should be aware that even with all these great sounding bonuses, balance transfers can end up being very expensive if they’re not done right.
Exercise Caution
The most common balance transfer offer is the one where you’re offered a super-low introductory rate on transfers. An example of this type of card is the Blue from American Express. It has an introductory transfer rate of 4.99%.
The Blue from American Express, unless some other cards, fixes this interest rate for the life of the balance. Some other credit cards may increase the interest rate after the introductory time frame ends, which could last anywhere between six to 15 months. For this reason, it’s always important to read the fine print to make sure you’re getting exactly what you want.
You should also remember that not everyone qualifies for the advertised low interest rates. While the advertised rate may be appealing, the reality is that only a few with exceptionally stellar credit scores will qualify for the posted rate. The best way to increase your chances of qualifying for the lowest rate possible is to make sure you make your minimum payments on time for all your current charge cards and other debts. If you can pay more than the minimum, then you should do that.
Another thing to watch
Howard Strong, author of What Every Credit Card User Needs to Know warns that companies often have sneaky conditions. “You need to be extremely cautious,” he has been quoted as saying. You’ll have to decide for yourself if transfer fee is worth the interest rate you qualify for. Do the math. A 5% transfer charge fee will mean that you’ll pay an additional $50 for every thousand dollars you transfer.
Avoid the cards that charge hefty fees.
After the Transfer
So, you’ve done your research and found the perfect card for your needs. You’ve gone through the application process, been accepted for the interest rate you can live with, and are waiting for the balance transfer to go through.
The biggest mistake too many people make while they wait for the transfer to take effect is that they forget to continue making minimum payments on their old card/cards. If you do not make your minimum payments, this could have a negative impact on your credit score. A single late or missed payment is all some credit card issuers need as an excuse to increase your interest rates. Once the balance has been transferred, close your old ones so you’re not tempted to continue to use them. Then begin paying as much as you can on your new card so that you can eliminate your debt.
Marc Ilgen is an internet entrepreneur and author. He runs a website called Credit-Card-Apply-Online-Here.com to help people apply online for a credit card. His website also lets viewers compare some terrific credit card offers for people who want a balance transfer credit card.