Credit Cards and Common Balance Transfer Mistakes
Balance transfers are currently one of the most popular methods used by cardholders to manage their credit. Whether you are already in trouble with an unmanageable credit card balance, or you simply want to take advantage of the low interest rates offered by 0 balance transfer cards, doing a balance transfer is often seen to be an advantageous move.
While doing a balance transfer is indeed an advantageous move in many cases, it is still very common for cardholders to make mistakes that end up negating the advantages that it brings. The sad thing is that these mistakes would have been easily avoided, and are committed just because the cardholder did not take the time to learn more about the not so secret fine details of credit card balance transfers.
The first mistake that most cardholders commit when doing credit card balance transfers is not finding out all the handling fees, or transaction fees, that will be charged. This includes fees charged not only by the new balance transfer credit card, which more often than not are actually very low to none, but more importantly the fees charged by the old credit cards from whence the original balance came from. These fees can be pretty significant, so that the low interest rates offered by the new card on the balance transfer are offset by the charges. So find out what those fees are to make sure the amount of money you will save in the end is worth the effort of looking and applying for a new credit card and doing a balance transfer.
The second mistake cardholders make when doing a balance transfer is immediately closing their old credit cards. If you want to manage your credit properly, you should make sure that everything you do will positively impact your credit rating, or at least make sure it won't affect it negatively. By immediately closing your old credit card, without ensuring that it has zero balance in it, you are risking harming your credit history. Make sure you pay off the remaining credit card balance on the old card before closing it.
Last but not the least, cardholders make the big mistake of taking the low or zero interest rates on balance transfers offered by their new cards for granted. These rates stay on only for a limited period, specifically during the promo period, after which the rates go back to normal. Make sure you have figured in the difference in rates before and after the promo period so that you don't get surprised by the jump in interest rates.
While doing a balance transfer is indeed an advantageous move in many cases, it is still very common for cardholders to make mistakes that end up negating the advantages that it brings. The sad thing is that these mistakes would have been easily avoided, and are committed just because the cardholder did not take the time to learn more about the not so secret fine details of credit card balance transfers.
The first mistake that most cardholders commit when doing credit card balance transfers is not finding out all the handling fees, or transaction fees, that will be charged. This includes fees charged not only by the new balance transfer credit card, which more often than not are actually very low to none, but more importantly the fees charged by the old credit cards from whence the original balance came from. These fees can be pretty significant, so that the low interest rates offered by the new card on the balance transfer are offset by the charges. So find out what those fees are to make sure the amount of money you will save in the end is worth the effort of looking and applying for a new credit card and doing a balance transfer.
The second mistake cardholders make when doing a balance transfer is immediately closing their old credit cards. If you want to manage your credit properly, you should make sure that everything you do will positively impact your credit rating, or at least make sure it won't affect it negatively. By immediately closing your old credit card, without ensuring that it has zero balance in it, you are risking harming your credit history. Make sure you pay off the remaining credit card balance on the old card before closing it.
Last but not the least, cardholders make the big mistake of taking the low or zero interest rates on balance transfers offered by their new cards for granted. These rates stay on only for a limited period, specifically during the promo period, after which the rates go back to normal. Make sure you have figured in the difference in rates before and after the promo period so that you don't get surprised by the jump in interest rates.
