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Balance transfer is the process by which credit holders transfer their remaining loan amounts from one bank account to another. Financial institutes advertise zero percent on balance transfer to attract customers. In this offer, the credit holder need not pay interest rates on their balance transfer. There are also other perks and discounts associated with them. The financial institute always try to hold on to their customers while the debtor is always on the look out for banks with lower interest rates on the loan amount.

Zero percent on balance transfer seems to be of great value for the customer however, there are certain pitfalls associated with it.

How to tide over the pitfalls

  1. Most financial institutes charge fees for transferring the credit card balance at zero percent. The financial institute or the bank is sure to recuperate their loss by introducing some kind of levy on the credit holder. Before making a deal, one must check thoroughly if there are any hidden charges attached to the zero percent charge, on balance transfer.
  2. Sometimes the balance transfer is offered at zero percent, but the purchases become very costly. To tide over such situation it is best to get another card for balance transfer.
  3. There is a grace period for this scheme. After this period, the credit amount will incur the normal rates. Make sure of the grace period and try to repay the loan before it has ended.
  4. The interest rate that is usually set at the end of the grace period is very high. The bank tries to earn profit from it. It is therefore very essential that the customer understands and agrees with the interest. Sometimes it is better to pay nominal interest on balance transfer rather than the higher interest rates charged after the grace period gets over.
  5. All credit card companies have certain terms and conditions attached to the loan amount. These are finer prints and should be read properly before making a deal.
  6. Late payment and missed payments should be avoided. Banks will always be on the look out for reasons to charge penalties and invoke fees and surcharges.
  7. Debtors should also avoid transferring their balances too often. Although zero percent on balance transfer stands to be a very lucrative deal, too many balance transfers give a bad credit history and banks would hesitate to give further loans.