When you consider a credit card balance transfer from several accounts to one new account for a special offer compare the offer carefully. These 0% and low transfer rate offers are frequently changed by the lenders. Before applying for one of the cards go to the lender’s website to be certain the offer is still available and terms have not changed.
Create a Chart and Do a Comparison
The best way to do a comparison is to draw five columns on a legal pad. The first column is for the name/lender of the credit card you are considering.
The second is for the length of time the special 0% or free transfer is offered. This will range from 6 months to one year. The third column is where you list the transfer fee that is required.
You will find a few offers with no transfer fee and those are often very good deals. The last column is to enter the APR of the account after the free interest period has expired. You can also list any pros or cons you find in the terms of the site by adding a fifth column.
This may sound like a time wasting exercise but this simple comparison chart can save hundreds of dollars by allowing you to closely compare all the facets of each offer and choose the one most beneficial to you.
By creating a chart of what each credit lender offers new account holders, you can compare the specific items that will affect your circumstances.
If you are planning to pay off your debt as quickly as possible, a 0% interest rate offered for a term of one year is excellent even if you must pay a 3% transfer fee.
Your goal in transferring debt to a new account may be to abandon accounts with very high interest rates. In that case, you may plan to pay off the accounts over time with more of your monthly payments applied to the debt rather than to interest charges.
If that is the plan you must look closely at what interest rate will be charged on your balance after the introductory period is over.
As you make entries on the chart you will notice many lenders have extra terms or extra fees built into the account and the economic trigger they use to compute variable interest rates may be different from one lender to another.
Making the effort to closely examine and compare offers from various lenders can save you thousands of dollars over the next few years. It is definitely worth your time to choose carefully before applying for new balance transfer credit cards.
Reducing Your Debt With The Credit Card Balance Transfer
A credit card balance transfer from one or several high interest accounts to one new account with a special offer can be a valuable tool to use in reducing your credit card debt.
With none of your monthly payments going toward interest charges you can reduce your balance very quickly. There are serious cautions, however.
If you transfer balances and then make purchases you are increasing your debt. When the 0% interest period expires you may face higher payments than you expect and these accounts can quickly get out of control.
Perhaps the greatest risk factor is that any violation of any term in the agreement can allow the lender to cancel the free period and immediately impose a regular interest rate on the account.
Because of the special free offer, these accounts almost always carry a higher rate of interest than a standard credit card offer. One late payment can, at the lender’s discretion, end the free interest period even if you just opened the account.
Some of the recognized large financial institutions offering zero interest transfers are also reputed to be the most predatory in their lending practices.
For this reason, one other step you might take when considering a credit card balance transfer is to do an online search to see if there are consumer complaints about the company’s balance transfer practices.