Balance Transfer Credit Cards Dos and Donts

2007-03-08 10:33:40

( Financial )



When things get a little out of hand with your credit card, you have two options: get a loan from another source to pay your credit card bill, or you can get balance transfer credit cards that can accommodate your outstanding credit and give you more time, but less money, to pay up.

Charges
When you decide to transfer balances from your current credit card to a new one, you will probably search for the card that can give you a lower interest rate. This is a wise thing to do. However, you will have to read the fine print on the packages offered to you.

Apart from the interest rate, see how much the actual balance transfer and the card processing costs. If all the dues add up and it equals to the sum of your current credit card charges, you are either better off keeping your current card or shopping for another card that will give you lower rates.

Introductory Rates
If you are offered an "introductory rate," ask how long the introductory rate will apply. If the introductory rate is for a limited time, ask how much the regular rates are after the introductory promo is up. You will also need to know the applicable rates in case you stumble upon late payments or overcharges. Balance transfer credit cards also charge an annual fee, and it will be good to include this in your computation. Compare the rates with that of your current card and decide if it is wise to get balance transfer credit cards.

Initial Balance Transfers
You may also find an entry in balance transfer credit cards saying that the low rates are applicable to "initial balance transfers." This refers to your first balance transfer to the new card. Find out, before getting the card, how much the rate is for the succeeding balance transfers as they may be considered cash advances charged to your new card.

Mind the Old Card, then Forget It.
When you have applied for the balance transfer credit card and are waiting for the new card to arrive, try to pay part of your credit with the old card to minimize the penalties that you may be charged for late payment.

When you receive the balance transfer credit card, call your old credit company and ask for a statement of account with zero balance. After receiving this final billing statement, request for the cancellation of your old card--and enjoy the benefits of the new one.


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