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Research: Balance transfer deals that you would want to avoid - Credit-Land.com

Balance transfer deals could be good or bad depending on the way they are used. There are some balance transfer deals, which will almost spell doom for your credit history. These balance transfer deals shouldn't be your option especially when you have a huge outstanding balance.

When the introductory period is not long enough

If the 0 APR is not offered for a long enough period, the balance transfer is not worth the risk. In fact, anything under a year is not really good enough if you are considering a balance transfer. Currently, quite a few credit card issuers are offering 0% APR for as long as 18 to 21 months. The industry average, without these long introductory periods, is still hovering around 9 months. It's highly recommended to make your own calculating decision, before accepting such cards.

When there is a high annual fee

If you are looking at an annual fee of around $75, then you might reconsider your options. A balance transfer card with such high annual fees might not be really worth it, if you are not saving a lot through the 0% interest during the introductory period.

When there is a balance transfer fee

An increasing number of credit card issuers are imposing a high balance transfer fee these days. These transfer fee is not fixed and is between 3 ?C 5% of the actual balance that you transferring. If you have an outstanding balance of $5000, you are looking at a balance transfer fee of $250, which is quite substantial. This fee is added to your principal, and eat into your savings. Unless you are saving a lot through the 0 APR promotional period, it is not a good idea to pay the excess fee.

When there is an initial down payment needed

Going for a balance transfer card is all about the right calculations without leaving anything to imagination. If a balance transfer deal needs you to pay a part of the amount, then it could upset your calculations. Moreover, the gains through no interest will reduce if you will have to arrange for about 20% initial down payment.

No rewards

Irrespective of what the introductory offer is, and the term of the introductory period, a balance transfer deal is still a normal credit card. Not being offered any attractive rewards or incentives beyond what you are getting, you should consider other options, as after the introductory period has ended, you will not be able to benefit in any way from the credit card at all.

When the APR is way above what you can manage

It is better to go for a low interest paying credit card than a balance transfer card. Some cards might initially offers a 0% APR for the first year, then hikes their charges making payments difficult.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.