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Transfer a balance

Q. How do I transfer a balance?

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.

First, ask these questions:

1. How long does the introductory rate last?
2. What is the card's annual percentage rate after that teaser rate expires?
3. Does the teaser rate apply to transferred balances or new purchases or both?
4. Does that card have an annual fee?
5. What about late fees and over-the-limit fees?
6. Ask if there are balance-transfer fees (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).

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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 waives 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.

In such cases, every other balance transfer is treated as a cash advance and is subject to cash advance fees.

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 7.9 percent teaser and a regular annual percentage rate of 21 percent.

Also realize that it may only take one slip-up for that super-low rate to disappear. For example, a Platinum MasterCard from Fleet with a 9.99 APR jumps to 21.99 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.

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 transferring balances between credit cards.


-- Posted: Aug. 14, 2002




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