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Before you transfer
that hefty credit card balance to a card with a super-low introductory
rate, read the fine print and ask questions. Otherwise, you could
end up paying fees and a much higher interest rate than you expected.
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Ask these questions before transferring
a credit card balance |
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Read through the credit card offer a few times. A
lot of the information is hard to decipher. For example, some offers
waive fees for "initial balance transfers" only. These
are the transfers that are authorized when the customer accepts
the card and completes the balance transfer form. (Some issuers
charge transaction fees as high as 4 percent. So the higher that
balance, the higher the transaction fee. A 4 percent fee on a $5,000
balance would cost $200).
In such cases, every other balance transfer is treated
as a cash advance and is subject to cash advance fees.
Who gets the super-low rate?
Keep in mind that not everyone who gets an offer qualifies for the
super-low rate. While an offer may boast a 3.9 percent teaser rate
that bumps up to 17 percent after six months, a person may qualify
for a card with a 7.9 percent teaser and a regular annual percentage
rate of 21 percent.
Also realize that it may take only one slip-up for
that super-low rate to disappear. Some rates can jump as much as
11 percent after one tardy payment. And if you fall behind on payments
on another card, your new card may raise your rate.
Once comfortable with the terms of the offer, be sure
to fill out the balance transfer form carefully. Incomplete information
may halt or delay a transfer.
Don't neglect the old card
It's also a good idea to make the minimum payment on the old card
while waiting for the balance transfer to take effect -- which may
take anywhere from two to four weeks.
The last thing a person who is trying to minimize
their credit card costs needs is a $29 late fee and a penalty rate.
The new card company may send a notice saying the
balance transfer is complete. Be sure to call the old card company
and verify this. Write down the name of the person you talked to,
the date, the time and what was said.
To avoid any mix-ups, experts urge people to wait
until the old credit card company sends them a billing statement
with a zero balance. If the company doesn't send one, request it.
Then cancel the old card -- you don't need it.
Use this step-by-step
worksheet as a guide for moving balances from one card to another.
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Chapter 4: Managing your cards
