Don’t Fall into Balance Transfer Trap
There are lots of credit cards that can help you struggle with a financial burden. And it’s probably not a secret for you that the best of them are balance transfer credit cards.
But please don’t grab this offer right away no matter how good it is.
It’s not a secret that balance transfer credit cards can save you pretty much. These credit cards are similar to average credit cards which allow cardholders to borrow. However, they also allow cardholders to transfer outstanding debt from one credit card to another new credit card with lower Annual Percentage Rate (APR). Here is the main point of saving and possible trap!
From one hand, balance transfer is an advantage of lower interest rates. But from the other hand, it is a time bomb.
Let’s take a look at the promotional APRs on balance transfers. Most balance transfer credit cards come with 0% APR for a certain period of time, 12 month on average. After that the balance transfer APR rises to the variable regular rate, which could be 20% or even higher, depending on the card and customer’s credit history.
So, how does it work? Credit card issuers attract you with a 0% “long lasting” intro APR bait and then catch you when you stumble through credit managing. Even tiny mistake from your part may turn to big money for them.
During a promotional period, the credit card issuers hope that you make just minimum payments. Thus in a year you will slightly reduce your credit balance and they will nail you to the ground with their sky-high interest rate.
Remember, they are highly experienced in playing waiting games and they’re thinking marathon, while you may be obsessed with the spirit.
However, your goal is different from the balance transfer credit card issuers. They want you to carry a balance beyond the promotional period, while your aim is to pay off the entire balance before the APR resets. If you accomplish this feat, you will pay nothing (use no fee on balance transfer credit cards to save even more money).
But if they accomplish their goal, which often happens, you will pay a lot more money than they save you.
So when choosing a balance transfer credit card, be sure to do the math and set up a payment plan to extirpate your debt before the interest rate resets.
Latest Balance Transfer Card News
According to the 2019 Balance Transfer Credit Card Report from CompareCards, more than 75% of cardmembers in the U.S. fail to understand properly how balance transfers actually work. Despite the fact that most of the respondents already had experience of using balance transfer credit cards, 76% of them are still confident that if they fail […]
Balance transfer is the process of transmitting the balances between two credit cards, where the outstanding dues are migrated from a card with high APR to a ZERO interest credit card. Several renowned banks in addition to offering debt transfers from the existing cards to the new ones also include transfers of bank loan amount […]
More people may find themselves on Santa’s “nice” list this year, getting all the things they wished for on their holiday list. At least, if spending forecasts are right, they will.
A new co-branded card from Chase and United Airlines is offering an array of benefits, including 40,000 bonus miles when cardholders spend $2,000 in the first three months of having the card and a $100 bonus when they make their first purchase.
The holidays are supposed to be a joyful time, but for many, that joy is dimmed by concerns about money. Credit card debt, in particular, can cast a shadow over holiday cheer, according to a survey by one of the United States’ leading mortgage servicer.
