Zero Percent Balance Transfers: Things To Watch Out For

2007-03-08 10:33:40

( Financial )



Zero percent balance transfers allow you to transfer your credit card balance (what you owe a credit card company) from one credit card to another. This is performed in order to obtain a lower interest rate. In some cases, some credit card companies will offer you a zero percent interest rate. As a result, you save some money, and can use the money which you saved from the lower interest rate to help pay for the principal amount on your credit card.

Zero percent balance transfers can also be used to transfer balances of personal loans; loans from department store credit cards and gas company issued credit cards.

Although a balance transfer may seem appealing, there are some points you should consider, and take note of before going ahead and applying for zero percent balance transfers:

Read the fine print of the balance transfer agreement carefully. Ensure that you understand all terms and conditions that are outlined in the zero balance transfer agreement.

Keep in mind that a no interest balance transfer offer will only provide you zero interest for a certain period of time. At the end of the promotion period any unpaid balances will be subject to a higher interest rate. It is strongly recommended that you consider exactly how much you can afford to pay each month, and ensure you can actually pay for it before deciding on a balance.

You should also inquire with your credit card company whether any fees are charged for zero percent balance transfers if the transfer is made to another card. Some banks charge fees equal to a certain percentage of the amount you transfer, while others charge a flat fee.

Keep in mind that when applying for these zero percent balance transfers between credit cards that you should not stop paying the minimum payment required on your old credit card while waiting for your transfer to be applied, so to avoid being charged a late penalty fee.

Finally, a way to avoid late payments is to request the due date of your zero percent balance transfers to be closest to the date you normally receive your pay. A single late payment may cause your zero balance transfer to be forfeited, and require you to pay for the entire balance, which you transferred in full. Additionally, you may be subject to higher interest rates apart from any penalty fees.


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