So, let’s assume that your current company isn’t willing to work you on lowering your credit card rate or offering any other helpful deals. In this case, you have no choice, you have to get yourself a new credit card with nice low rates and transfer all your balances to it.
Ann Landers always advised taking your time when getting into a relationship, remember? Well it’s no different when it comes to dealing with personal finance, specifically shopping for a new credit card for the purpose of transferring your old balance.
There are critical details that you must know the truth about or you may likely discover that your balance transfer isn’t a financial rescue but an expensive nightmare.
As you begin your search, inure yourself against charming sales people you may speak with over the phone. It’s their job to sell you. And while it may be the case that no one comes right out and lies about what they offer, you may assume they are generally under this directive; if the consumer doesn’t ask, don’t tell. So it’s up to you to be smart and informed and aggressive in terms of gathering information.
Nitty Gritty Question Number One:
Does the credit card being offered have an introductory interest rate? Many credit cards offer this as an incentive to attract new customers. Smart, right? But the key word here is introductory! What it does for you as a consumer trying to reduce your debt, is that it eliminates or seriously reduces all your monthly finance charges for set period of time. Voila, you are spending less suddenly, making it easier to pay off your credit card debt.
Of course, you want to find the longest introductory period you can because the longer that sweet deal lasts, the more easily you can pay things off. It’s that simple. Ask the company directly, how long their introductory period is. Six months to a year is typical. And why not, you can always ask for more time. What are they going to say? No, big deal. Yes, then you’ve got it made.
Stranger Danger!
The credit card APR you don’t know could hurt you. Sometimes when you’re looking for one thing, you can get so absorbed that you forget to look at the fine print and the rest of the deal and any contingencies. So, let’s say you find a credit card with zero interest for the first year on balance transfers. Good for you. But wait. Before you throw your money their way, find out what their APR is. That’s the annual percentage rate; the amount of money they can charge you on the balance you carry with the credit card. They charge you for borrowing the money and they make this loan at a cost. The cost is derived from a formula applied to the balance of what you owe. In a nutshell, it’s a percentage charged on the total amount you owe the company.
Another pitfall to beware of is that it’s quite usual for credit card companies to charge different rates and offer different conditions for balance transfers, purchases and cash advances. Ask and be clear about their credit card payment terms.
Hidden Fee Traps!
Many an unwary consumer has discovered after the fact, that the free, 0% balance transfer actually does cost something. Some companies call this a balance transfer fee. The amount may vary from company to company. Sometimes it’s just a flat dollar amount but it may also be based on a percentage of the amount of the balance you are transferring. Sometimes, if you ask very nicely and have credit that looks as good as Elle McPherson’s legs, they will waive that fee for your first transfer. If you transfer other money later though, they will want to sock it to you then most likely.
Everybody Pays!
Okay so you found a credit card with a low or 0% introductory rate and you transfer your balances. Make sure you pay your new credit card balance like clockwork because otherwise you can start to go over your limit, be subject to penalties and other evils that will leave you at the mercy of the default interest rate. This rate is the highest rate allowed by law that the credit card company can charge you. Whatever else happens, you do not want to have to pay it. It’s like going over to the dark side. As everyone knows, once you’re there, it’s hard work getting back.
To avoid traps, shop and compare credit card rates and terms. For new credit cards, review the credit card application before sending it in. Shopping and comparing a credit card online is one of the easiest methods to make sure you are well informed. Always make sure you are getting the best credit card and the best credit card rate.
Tags: best credit card, best credit card rates, credit card, credit card application, credit card apr, credit card balance, credit card balance transfer, credit card debt, credit card online, credit cards, new credit card
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