Credit Card Tips Blog
Are Credit Card Balance Transfers Really Worth It?
Credit card balance transfers are available from leading credit card companies looking to take business from the competition and have the card holder open an account with their own credit card company. There are often special offers associated with the switch, and with every new account consumers are given the option to transfer balances from other credit cards. Are balance transfers truly worth it? What terms are associated with the transfer? Before taking advantage of a balance transfer option, it is important to be an informed consumer – here is everything that you need to know about balance transfers:
Watch Out for Fees
A balance transfer is almost never free. There are fees associated with the transfer that are automatically added to the new balance. With most credit card companies, this fee is an even three percent and added on to the balance that is being transferred to determine the balance of the new credit card account. Aside from this fee, watch out for other one-time transferring fees which can cost the consumer up to $49.00. Speak with the credit card company to ensure that these fees are minimal and ask about the chances of waiving the fee before the balance transfer is requested.
Look for Introductory Offers… but Read the Fine Print
Introductory offers are ways that credit card companies lure consumers to their company with the use of a balance transfer. These offers include no interest on balance transfers as well as purchases for periods from twelve to eighteen months. The longer the term, the more beneficial for the consumer as you can have more time to repay the credit card directly to the principal, rather than to the interest the principal has accumulated. However, after the term has been completed, if a balance remains on the card the consumer could be liable for interest rates that were higher than the initial card.
In the fine print of the balance transfer agreement you will often find the following stipulations; monthly payments must be made on time and not missed to ensure that the balance transfer zero percent interest rate remains valid. Missing a payment or being late could mean that you could be charged up to twenty percent interest.
Check Your Repayment Plan
Are you able to realistically repay the balance of the credit card in the time before the introductory offer f the balance transfer expires? If not, than you should avoid the balance transfer. Create a repayment plan and calculate how much money would have to be repaid to ensure that the credit card would be entirely repaid in the term before the balance transfer expires. If you are not able to repay the credit card balance in full, than you should avoid the balance transfer – as it could cost you in the end!
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Written by Credit Card Tips on March 14, 2009
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Comments (3)
srilaxmi
May 8th, 2009 at 4:40 pm
Yes, I feel credit card balance transfers are really worth. There are many advantageous of this balance transfers. They are you can transfer the credit card balance to card that offer lower rate of interest compared to present one. With lower interest charged on the credit cards you can limit the interest accruing on the balance, there by pay off the balance faster. The other benefit is that you can transfer the balance to credit card that offers 0% interest rate on the balance transfer as an introductory offer; through this the amount you pay monthly towards your credit card payment will reduce your balance and become debt free.
sri2k6here
May 8th, 2009 at 5:46 pm
Credit card balance transfer is really worth are they offering lower rate of interest or 0% rate of interest. With 0% interest you relay benefit by paying regularly towards the balance and no interest accruing for the predefined period. You can become debt free very fast with 0% balance transfers by allocating the entire amount you pay towards the reduction of the balance and no interest accruing till the period ends. One must remember to look for any introductory offers that are prevailing at the time you are taking and any fee that are charged on your balance transfer before availing the offer.
Credit Card Balance Transfers
February 25th, 2010 at 9:46 pm
Another thing to watch out for with credit card balance transfers is lenders loading their own standard APR rate following a 0% balance transfer introductory period.
Normally you’d transfer your balance ($5000) at an introductory rate of 0% for say 12 months. Then your balance would revert to the ’standard APR’ which could be say 16%
However, some credit card companies are now offering the 12 months at 0% APR but afterwards instead of shifting your remaining transferred balance to their standard rate of 16% – they will stipulate in their ’small print’ that following the introductory period any unpaid balance which has been transferred will be charged at 18% (or so) until paid off.
Generally speaking these lenders are adding a couple of percentage points to their standard rates for outstanding transferred balances once the introductory period has expired. Check the small print!
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