The One Thing You Need to Know About Balance Transfers
Transferring a high-interest balance to a new credit card with a 0% APR promotional rate is one of the smartest financial moves you can make. It seems like an easy way to pay off debt quickly, with not a lot of questions about whether it’s a good idea or not. It is, almost always, the very best thing to do if you’re having trouble paying down your credit card debt.
However, there is one very important thing you need to know if you are planning to do this. It’s the one thing that can completely invalidate the goodness of this financial move, and it’s something that’s very easy to avoid, if you only know about it.
Here it is: you should never make a late payment on a balance transfer card.
Why? Because if you do, you may lose your no-interest introductory offer and be right back where you started, trying to pay off a big balance.
Not many people realize that by making a late payment on a balance transfer card, they aren’t just risking a late payment fee (generally around $35 a pop). In addition to losing your 0% APR, you could also be charged a penalty APR, which will usually be the highest possible APR the creditor can legally charge you.
How to avoid this terrible – and expensive – fate? Easy. Just set up reminders to always pay your bill on time. Sign up for text alerts and email alerts to let you know when your payment due date is approaching. Even better, set up automatic payments so your minimum amount due is automatically deducted from your checking account each month before the payment due date.
Another important thing to know
Besides that number one big thing to know, there’s another small piece of business you should attend to when you do a balance transfer.
You should always make sure you continue to pay your minimum due on the balance you’re transferring, until you are sure the transfer has gone through. Many people make the mistake of stopping paying on their old account as soon as they apply for the transfer. But you need to make sure to keep paying until it goes through. This can take a couple of weeks, or it can be immediate – keep tabs on your account so you know when it happens.
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