Credit card balance transfer is a common thing and to some extend people find it as an option in efforts to clear their credit card dept. the exercise is simple but can be costly if you don’t take precautions and don’t get right advice in what is involved in balance transfers. The information here will enlighten you with the dos and don’t next time you want to undertake credit card balance transfers.
Before you proceed with balance transfer, you have to inquire if there are introductory interest rates involved. This is because introductory interest rate will do away with monthly chargers that are levied on balance transfers over a period of time. In addition a lot of credit cards have a zero or low interest introductory rate. The basic behind this is to make it easier for you to do payment on your credit card dept much faster.
You have to be informed that according to the credit card law the introductory period is between six to twelve months. This will therefore provide you adequate time period to do your payment. Note that the longer the introductory period, the longer you will have to pay your dept without receiving the full financial charge.
When you delay and the introductory period expires, you will be entitled to the APR (annual percentage rate) which will vary depending on the balance transfers APR and purchases APR. To be specific, the annual percentage rate on balance transfers is a little higher than that of purchases. It is therefore advisable to try and pay within the introductory period to avoid high rates later on.
Also be keen to differentiate the fact that introductory interest rate does not apply to both balance transferred and purchases as well. Each has their own rates and is thus considered different from one another.
Not anyone can qualify for an introductory interest rate as some may assume. Your credit history majorly contributes if you are to be accorded an introductory interest rate. In a majority of cases, those with poor credit card history will end up with high rates compared to those with good records.
You will have to be levied a balance transfer fee based on the percentage of the amount that you are transferring. In some cases this is usually a flat fee. This fee is known to increase the cost of transferring thereby those wishing to save money on interests through transfers are not so luck because this fee will negate their savings possibility.
Should you miss doing your monthly payment, or exceed your credit limit, be sure that you will be charged with the highest interest rate after expiry of your grace period. Credit card default rate can be very expensive and you should take precaution not to fall a victim as this will drain you a lot of your money and it will take time to settle the balance. Next time you want a balance transfer, be sure you know why and how you will settle the dept.