If you’re trying to eliminate your credit card debt, you may have decided that your best bet is to transfer the balance to a new card with a special rate for transferred balances. While the idea of moving your balance to get a lower rate is definitely a good one, there are some things you need to know and some pitfalls you want to avoid. These key questions will help you make the right decision when evaluating credit card offers.
Is there a minimum amount you must transfer?
If so, beware of the rate after the introductory period. The credit card company is betting that you won’t pay your balance off in time and they will be able to charge you at the higher rate on the remaining balance.
Does the introductory rate apply to new purchases?
If not, find out the interest rate for new purchases will be. If the rate is high, you’ll want to put this card away and not charge anything else to it. Any payments you make will more than likely apply only to the balance you transferred, and the balance from your new purchases will continue to increase at the higher rate.
How fast do you think you can pay off the balance?
If the new card has a fee, you need to factor that into the equation, especially if you plan on taking a long time to pay off the balance. No annual fee is the best.
What happens if you are late on a payment?
By paying late, you’ve technically violated your contract with the credit card company. This gives them the right to increase your rate. Make sure you make your payments on time, or that great 0% rate for balance transers will disappear!
When transferring balances, make sure you know all of the details of the offer before you make a final decision. Remember, the card company’s motivation for offering you a balance transfer deal is to gain your businesses as a paying customer!