Don’t Forget These About These Facts About Balance Transfers

Balance transfers represent enticing offers, especially because they usualy involve credit cards with lower interest rate charges than that from which the debt was originally accrued. However, it is advisable for individuals who are wishing to transfer their huge credit card balances to another card with a seductively low interest rate, to understand the finer details in the deal that they are about to enter. Without this, they could end up in a worse state than before, paying hefty fees and even higher rates.

A couple of things are vital and need to be considered:

Expiry of offer: Borrowers should always consider the lifetime of the introductory offer because some can be disappointingly short.

Annual percentage rate: As much as the introductory rate may be enticingly low, the annual percentage rate may be crippling.

Scope of offer: Some introductory offers apply to transfer balance only while others apply to only to purchases. There are also some which apply to both.

Annual fees: If the card has an annual fee, it should be factored in to the decision.

Penalties: Any charges applied as late fees and over-the-limit fees are also important to consider.

Transfer fees: For issuers who charge transaction fees, the higher the balance the higher the transaction fee. With some as high as 4%, this on a $7,000 balance would cost $280!

Fine print

A lot of information on the offer may be hard to understand, and it is therefore important for those interested to read through and seek explanations for everything. A case in point is where some issuers offer to waive fees on initial balance transfers only, meaning that any other balance transfers after this initial one  are subjected to cash advance fees.

Eligibility

The low rates do not apply to every successful applicant. An offer may advertise a 3.9% introductory rate, yet the applicant gets a card with a 7.9% introductory rate. This is usually due to the credit worthiness of the borrower.

Understandably, lenders advertise their best rate to catch the attention of millions of consumers. Nevertheless, even the most credit worthy users may be ineligible for the best rate. Furthermore, failure to make timely repayments can result in an automatic rate increase. For instance, the Fleet Platinum MasterCard charges interest of 9.99% p.a. that increases to 21.99% after just one delayed payment.

The process

The balance transfer can be filled after the user is satisfied with the offer terms. Since the transaction may take up to four weeks to be effected, it is advisable to make the minimum payment on the old card, to avoid a penalty rate and a possible late fee.

A notice of completion of the transaction may be given by the new card company. This should also be confirmed with the current card company, making sure to document the identity of the person giving the information, day, time and details of the conversation.

Before cancelling the old card, borrowers should wait for a billing statement with a zero balance from the credit company, or request one if it is not sent.