A Debt Consolidation & Credit Counseling

Debt Consolidation &
Credit Counseling

Too many bills?
Trouble keeping up?
Behind?

Free
Debt Consolidation
Quote

Credit Cards

Balance Transfers

For Fast Response Toll Free

Pay off your bills today and lead
a debt free life tomorrow!

Receive your FREE debt consolidation analysis and start saving today! Click Here for your free quote.

Balance Transfers

When you consider transferring your balance from one credit card to another, be sure you fully understand what the terms are.

Credit card companies spend a lot of advertising money each year to convince you that their particular offer is the best. To entice you to switch allegiance from your current card company to theirs, they often allow new customers to transfer their balances at very low rates. This lets more of the payment be applied to the principal on that balance that’s been hanging over your head way too long. The balance is finally decreasing noticeably and rapidly. And voila – you’re out of debt before you know it.

On the surface, it looks like a great way to get rid of high-interest rate debt quickly, and save a lot of money too. But it’s not that simple. Before you take that leap, pay attention, or that great offer could become a very costly mistake. Here’s what you need to know:

Is this the permanent rate or a temporary promotion?
If not, then how long will it be in effect?
What will the APR be when the introductory rate expires?
Is there an annual fee? If so, what is it?
Are there balance transfer fees? If so, what are they?
(Note: our experience indicates that some creditors can charge fees as high as 3% or 4% of the balance transferred. And, the higher the balance, the higher the fee. So, a 4% fee on a $2000 transfer would cost you $80. Keep in mind that you will be paying interest on that amount as well; if you pay only the minimum required payment, then that fee of $80 could become very costly.)
Do you lose out on the special rate if your payment is late?

Be sure to read the entire agreement, especially the fine print. Review it thoroughly until you’re sure you understand it. Call and ask for clarification if necessary. If our questions are not answered to your satisfaction, or if you are confused, don’t sign up. After you’ve reviewed these questions with the creditors, you need to consider several other factors.

First, just because you received an invitation to apply for the special promotion, don’t assume that you immediately qualify for the offered APR. Remember that the promotion is a general mailing. In the end, not all customers will meet the creditors’ specific criteria for that extremely low rate. So, while you may be lured in with a special rate of 2.9% (with an increase to 17% after, say, 6 months), you may find that you qualify for an introductory rate of 8.9%, with an increase after six-months to 21%.

Next, be sure that you maintain accurate records of exactly what amounts you transfer, which accounts they are moved from or to, and exactly what the terms are on each account.

Some creditors will waive fees – but only for the initial amount(s) on the balance transfer form. After that, all other transfers are treated as cash advances, and you will be charged accordingly.

As mentioned previously, be sure to make the payments on time. Many creditors will raise their rate to well over 21% after just one late payment. One more tip: They keep an eye on your payment activity on other accounts as well. If you fall behind with another creditor, don’t be surprised to see a much higher APR on that new card when you get your next statement.

The offer of low interest rates or waived membership fees are usually issued according to exacting rules. Be sure to fill out any additional application or transfer form carefully, otherwise, it may be delayed or cancelled. The transfer itself may not go into effect for two to four weeks. Therefore, as you’re trying to reduce your costs, make a payment on the previous card to avoid any late fee.

When you receive confirmation of your acceptance and receipt of transferred funds, document such transactions. All confirmations should be received in writing, but if you need to contact the credit card company, make a note of the date, time and name of the representative you spoke with.

To protect your credit rating, be sure your previous creditor reflects a zero balance on the statement before discontinuing payments on the card. Once you have assured yourself that the transfer went through, and that you don’t owe on any remaining balance, the next step is to cancel that old card. The cancellation can be done over the phone, but, as with all financial transactions, follow up with a letter referencing the previous phone call and confirming the cancellation request.

The offer of a balance transfer with very low introductory rates can be enticing and actually provide a reprieve on high interest rates, allowing you to pay down credit card balances. Just be sure you are getting a better deal than you are leaving by carefully examining the offer.

Free Debt Consolidation Quote

Articles

Credit Cards | Bankruptcy |