Balance transfer deals are amongst the most popular credit card deals amongst card holders these days. As more and more people coming out of the economic downturn are trying to pay off their debts, balance transfers offer a wonderful deal to customers to pay off the principal quickly without allowing the interests to accumulate. However, not all balance transfer deals are as good as they seem to be. Therefore here are 5 attributes, which decide how good the balance transfer card is.
The introductory interest rate
Every balance transfer card offers an introductory or promotional interest rate that is lower than the actual APR average rates. This introductory rate proves particularly attractive to those credit card customers who have an outstanding balance and are anxious about accumulating interests. Therefore only those credit cards which offer a 0% APR as the introductory deal, are really worth the bait. Unless this is the case, shifting from one card to another and risking paying a balance transfer fee is not worth it.
Introductory offer period
The time for which the introductory or promotional rate of mostly 0% is applicable is important too. This could sometimes depend on the credit rating of the individual, which is why the credit card customer must double check to confirm the period applicable in his or her case. This period could vary from 6 months to 21 months in some cases, for customers with excellent credit rating.
Balance transfer fee
Balance transfer fee usually varies between 3-5% of the balance transfer amount. In some cases, it is even waived off for the credit card customer. If the balance transfer fee is high, the whole deal is really not as attractive as it may seem. This is because the fee will eat into the savings that the credit card customer would be hoping to make through the promotional low interest rate offer. Therefore credit card balance transfer deals should have lesser fees to be of much value.
Although the promotional interest rate is quite low, you cannot keeping transferring balances and have to stick with the card for at least a few years. This means, the actual interest on the dues for the credit card, are important too. If the APR is too high, over 20-25%, then the deal is risky. This is because, if you don't manage to pay off your outstanding balance then you may ending up paying a lot of interest on the outstanding balance, which is not what you would have planned for. Hence the actual APR on the balance transfer card should be reasonable and not too high compared to your existing card.
Annual fee and initial down payment
Some balance transfer cards
require you to pay off part of the outstanding amount before the balance transfer. If this percentage is high, then transferring the balance doesn't make much sense. Similarly it is a good idea to avoid balance transfer cards which have a high annual fee which is not being waived off.