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Research: Balance transfer tricks that customers should be wary of -

Balance transfer deals could be very profitable to the customers. Sometimes they could prove disastrous too. This is why, irrespective of how attractive the balance transfer offer is, credit card customers should be wary of the fine print and all the terms and conditions. Here are some of the tricks credit card issuers use on balance transfer offers.

Varying promotional periods

Although balance transfer cards are promoted with the highest promotional period on offer, it might not be the same for all customers. Those with excellent credit rating often get the highest promotional period while those with fair or good credit, get much lesser. This promotional period could vary between 6-18 months or even more. So, it is advisable to find out what the promotional period in your case is instead of being surprised later with an outstanding balance due and the promotional period expiring.

Balance transfer fee

Credit card customers should look at the fine print to find out what the balance transfer fee is. This fee will eat into the savings that you will make through the balance transfer, which is why you must know how much you are losing because of the transfer.

Initial down payment

A lot of balance transfer cards do not mention this, but it could be one of the most important requirements for opening the new card account. This initial down payment could be anywhere between 10-20% or even more. However, it could influence the decision to go with the new card as it may make the deal not so financially profitable after all.

High APR

Balance transfer cards might be offering 0% APR for more than a year. But the savings could just as well be eroded if the APR for the credit card after the promotional period is quite high. In fact, in some cases, it is so high that you cannot use the credit card for fear of running outstanding balances that will incur huge interests.

Applicability of promotional rates

Not all balance transfer cards allow the promotional rate on both balance transfer amount and purchases you have made with the new card. Sometimes it is only on the balance transfer amount and you should be careful. The trick here is that, when you payback the dues, the credit card companies are used to adjusting this towards the amounts on which there is no interest. This effectively means those amounts on which there is interest rate applicable, are still outstanding.