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Credit Card Applications » News » Other » Balance Transfer Cards

Balance Transfer Cards

May 17, 2007
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A guidebook to credit card applications with balance transfers

These days, high credit card fees are becoming a significant burden to most people. The good news is that there is a way, which people can lower their interest payments by transferring their existing balance to another credit card.

There is no doubt that balance transfers are the most cost-effective and convenient ways of reducing credit card costs. Before making any credit card applications, it is imperative for applicants to understand all the terms and conditions of the new card. Doing this will increase their chances of maximizing their savings.

If you are unsure about switching to another credit card, you might want to ask your existing card provider about whether you can get a lower interest rate. You can simply tell them that you have found a better deal elsewhere and that you would have to transfer your balance if they can not provide you a lower interest rate. In any event, you should be ready to transfer your balance if your credit card company turns you down.

Balance Transfer Uses

There are many benefits which a balance transfer can provide a card holder. By transferring your existing balance to a credit card with low APR, you can reduce your interest rate and monthly fee repayments by a significant margin. It is also worth mentioning that credit card companies charge different interest rates on balance transfers and purchases.

0 percent for six to twelve months is the most common rate on the market. For instance, the Chase Ultimate Rewards MasterCard and Citi Platinum Select MasterCard charge 0 interest on balance transfer and purchases for the first 12 months. On the other hand, the Discover Platinum Card and the Hess Visa Chase drop their preliminary rate once eight and six months has elapsed, respectively.

Furthermore, there are some providers of credit cards with low APR who link their introductory annual percentage rate to billing trends. The GM Card and the Fifth Third Bank Cash Rewards MasterCard are good examples.

These low APR cards both charge 0 percent APR for the first six and four cycles, respectively. Another advantage of balance transfers is that it can give cardholders access to more perks.

For instance, by transferring their balance, card holders may be able to get credit cards with no annual fees, which also have a lengthier payment grace time scales and offer cash back on purchases. In fact, some of the best credit cards which offer perks like car rental insurance, money saving discounts and identity theft protection programs.

How to go about Transferring Balances

It is widely known that there is no single one of the best card providers who do not use balance transfers to attract a bigger pool of new customers. If you are considering transferring your balance on an existing card, there are three ways that you should be aware of.

The first way is simply by filling out the forms supplied by your new card provider who is offering the best credit card deal. Alternatively, you can contact your prospective credit card company and inform them that you want to transfer your balance over to them. They can then help you make the necessary arrangements for a balance transfer.

It is also possible to transfer balances by writing a balance transfer or a convenience check. The way this works is quite simple. All you have to do is write a check for the sum of the balance transfer and mail it to your existing credit card company. If you decide to take this route, be sure to find out if your check has an expiration date. If it does, then you need to make sure you use it before the deadline, otherwise you will be charged the regular interest rate set for your card.

It does not particularly matter which balance transfer method you use. But you should note that you can only transfer the same credit limit allowable under your existing card.

The Costs and Fees involved

The majority of banks consider balance transfers as cash advances. As such, they have similar transaction fees. If you are transferring your balance in response to one of the many balance transfer credit card offers, you will not be charged a fee.

However, for some of the best card providers like Citi Platinum Select and a number of other card providers, the transaction fee for balance transfers is 3 percent of the amount of each balance transfer, with a $5 minimum and $50 threshold. It is important to note that it might not be cost effective to transfer a small amount of funds because the transaction fees involved might surpass any potential savings.

Aside from standard transaction costs, most banks and card providers charge customers hidden fees that can come up as a complete surprise. Some of these fees include:

Late fees - There are some banks that wait a few days before imposing a late fee. The majority however, will impose fees within 24 hours of when the payment was due. Card companies will either charge you a flat sum such as a $10-15 fee. Or they would charge you a percentage ranging from 5 percent of the minimum outstanding repayment.

The best way to avoid late fees is to mail off your payment well before it is actually due. If you choose to pay your bill at the bank, you ought to always find out how long it normally takes for payments to be processed. This is important because on occasion payments made at a branch of ATM are not fully processed for a few days.

Over-credit-limit charges - if you go over your credit limit, the majority of banks will charge you a fee for this. You will incur this charge every time you go over your limit. This means that you can get several of these charges in a single billing period. Banks traditionally charge you between $10 and $15 for every time you surpass your credit limit. The fees you incur do not comprise of the interest rate charge that you will still need to pay.

Lost card replacement charges - You are likely to incur a charge if you lose your card more than once. The standard fee which most banks charge for this is usually $10-15.

Making your Payments

The moment card holders have made a transfer, they must remember to make complete and scheduled payments otherwise they will incur higher fees. As a rule, there is no period of grace for repaying balance transfers. This means that interest will accumulate spontaneously.

It is always crucial to understand that when making payments, the payments you make are usually allocated to lower/promotional balances before they are transferred to higher APRs. This implies that you will paying 0 percent balance transfers before you even have a chance of clearing up regular purchase balances.

The best credit card interest rate on such payments can be as high as 9 to 18 percent. As such, it is advisable for card holders to use a different card for regular purchases and to clear off the balance every month. Balance transfers are best kept restricted to a different card.

After the Promotional Period Elapses

Card holders always need to ensure that they keep close tabs on the promotional period so that they do not get caught out. This is because as soon as it expires, normal interest rates will take over. The standard variable APR for Citi Platinum purchases (8.99 percent) will be applied to all outstanding purchase and balance transfer sums.

In the same vein, the standard variable APR for cash advances (19.99 percent) will be applied to all outstanding cash advance sum. If you fail to meet the agreement on Citi Platinum's card terms, the company reserves the right to immediately raise the APR on all balances including all promotional balances to a variable default rate of 28.99 percent.

You should also bear in mind that your post-introductory APR will be determined by your credit history. Should this new rate be higher than the one of your old card, you could end up making a substantial loss. It goes without saying that you have yet again the option of transferring your balance to another card. But there is always a danger of falling in to a vicious cycle of balance transferring and this can sometimes backfire later on.

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  • Larry
    With the Virgin / Barclaycard signature offer, there seems to be some consumer deception or maybe even outright fraud goin on.   I decided to jump on this offer..  read all the info on it..  was approved for their platinum card, paid the fee, then was only awarded 10,000 points instead of the advertised 20,000.   When i inquired about the less than advertised bonus points, Barclaycard claims only Signiture Visa cardmembers get the 20,000..  as a platinum cardholder, you don't qualify for that level of bonus, so you get 10k instead.   Well, in their current ongoing promotions, it states plain as day that....    Applicants approved for the Visa Signature or Platinum Card with $49 annual fee will receive 20,000 Bonus Points awarded to your Virgin America Rewards Account at the close of the first billing statement in which you make your first purchase or balance transfer (that is not returned or rescinded) and have paid the Annual Fee on the account (and such fee is not rescinded). They don't mention anything about a separate program for platinum cardholders..  However, trying to get someone to resolve this issue with either Virgin or Barclaycard seems to be rather impossible.. Seems to me they're simply drawing people in with the fraudulent offer, then simply saying, oh, we're sorry you don't qualify..  but thanks for signing up for our garbage credit card with insane fees..   
  • CreditLandCom
    Thank you for sharing your experience with us. We have reviewed this offer and you are correct, nowhere it is mentioned that 20,000 Bonus can become a 10,000 Bonus all of a sudden... We will mention this in our review of this card so others can make an informed decision. Another way to get Virgin miles is to get an American Express charge card: The Business Gold Rewards Card® now offers 50,000 Miles, though you do have to spend $5,000 in the first three months of card membership to get it. It also has $0 introductory annual fee for the first year, then $175. http://www.credit-land.com/details/the-business-gold-rewards-card-from-american-express-open.php Premier Rewards Gold Card now offers 25,000 Miles, though you do have to spend $2,000 during your first three months of Card membership. It also has annual fee of $0 for the first year, then $175. http://www.credit-land.com/details/american-express-premier-rewards-gold-card.php While we do not know If any of these offers make sense to you, we are at least sure that you will get advertised bonus in full if you decide to get them... Conversion rates for Virgin America are: 100 Elevate Points = 200 Membership Rewards® Points All the best.
  • Deborah Ellsworth
     would very much like to start a new credit history  by making payments on time I would tohave a credit card that is NOT PREPAYID! I don't need a card with a high limit just something to start a new credit history. Thank You Deborah Ellsworth
  • Deborah Ellsworth
    I would very much like to start a new credit line to get back on track. I DO NOT WANT A PREPAID CARD!! This new credit card if I am approved does not have to hace a high limit just something for me to start over again and prove myself ThankYou. D Ellsworth
  • Miss Edna
    there is a huge problem with the RFIP chip: it is easily compromised. There are already 'readers' in the form of what looks like a cellphone in a case, that scans all the info in the chip by merely walking near a person -- this 'reader' penetrates leather, cloth, spandex, etc. The only thing it will NOT penetrate is METAL. Perhaps one has seen commercials touting metal credit card cases. Here is my hint for a free fix: cut a piece of aluminum foil or use the foil that is used to keep foods fresh, like coffee. Cut it so that when folded once, it forms a sleeve for your credit card. place the credit card in the sleeve, then place the sleeve in your wallet.
  • Robin Parks
    I am looking to apply for the AARP Visa signature card from Chase that offers $100 after spend $500 in first 3 months, no annual fee and 0% interest first year; I don't want to mail in offer because of having to write in Social security #. Can you direct me to the proper on-line site?
  • CreditLandCom
    The Chase bank cards are not currently available at Credit-Land.com, but you can consider applying for the Citi® Dividend Platinum Select® Visa® Card - $100 Cash Back. The cards has similar terms and cash back program.
  • Becky
    This is Becky Now what do I do just waqit for acard to come to me?
  • CreditLandCom
    Once you have applied, you should receive a letter within 10 business days letting you know if you were approved and when your card will arrive. If you did not receive any letter or notification from the issuer, you should contact them directly. Also, you should contact the issuer if you’ve been waiting for your credit card longer than 30 days. Since we are not a bank and don’t issue credit cards, we cannot give you any information about your application or credit card.
  • SavingStar
    Thank you for posting about SavingStar. Just to clarify one sentence in your article, we have over 5 million members (not 500). Thanks, Josh
  • CreditLandCom
    Sorry for the misprint. We’ve corrected the sentence. Thank you for noticing that.
  • Eric
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