How to read the fine print while doing balance transfers?


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Credit Card Applications » Research » Guides » Balance Transfer Cards » How to read the fine print while doing balance transfers?

How to read the fine print while doing balance transfers?

Updated: October 10, 2018

The content is accurate at the time of publication and is subject to change.
Credit card balance transfers are good ways to save money where one can take advantage of the low introductory rate of interest. However, there must be some caution exercised as it might not be as advantageous as it may seem on the surface. You must know what to look for in the first place before you even consider doing a balance transfer. Balance transfers involve transferring your current debt from one credit account or more onto a new card account that will supposedly have a lower interest rate. Once the new account is opened the old accounts must ideally be closed after the balance transfer is complete. However, some people might prefer to keep them open for use in the future. The main aim of doing the balance transfer is to save money by way of interest that bites into the monthly payments that you make. This will leave you with more money, which can be utilized to pay off the debt much more quickly. Clearing the debt quickly is better than paying the huge interest. So, one must ensure that this can be accomplished by shifting to the new account, otherwise it would be pointless to do a balance transfer. How to read the fine print? Although all these balance transfer offers look pretty tempting at first, sooner or later one will realize that this may not be so, and it is important to read the terms and conditions and understand it well, before transferring the old balance onto a new card. Credit cards generally entice customers with low interest rates and for someone who is paying 18% or higher rate of interest on the monthly balance this deal would seem good.  However, will the low introductory rate be there for a sufficient period of time or come with a time limit of maybe 3 months to a year?  After the introductory period is over, the interest rates might simply jump to a significant sum where the interest might be higher than the one that was charged on the previous account.  So understand what would be the actual interest rate that you would be paying on the new account. The other question that you will need to ask is if the low interest rates will be applicable to the new purchases also. Check to see if there will be a fee charged on the balance transfer, as this will easily offset the savings that you would have gotten by doing the balance transfer. See if there will be an annual fee that would be charged on the account.  Check if there will be a grace period for making payments or if there will be a late fee that would be charged and the amount of late fees.  See if there will be a hike in interest rates and what will be the hike?  What would be the fee charged in case you cross your credit limit? Ask these questions and if you are convinced with the answer then go ahead with 0% balance transfers.

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.
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