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Balance transfer deals are a very good option for those credit card customers who have a high outstanding balance and want to get to prevent too many interests from accumulating. However, not all balance transfer deals are amazing. There are a lot of tricks that credit card companies use to exploit the credit card customers who have been drawn into the balance transfer deals.
This is amongst the most common tricks used by credit card companies to exploit those credit card customers who have been drawn into the balance transfer deals. Credit card customers with an outstanding balance, plan to save on the interests by transferring to another card. From the perspective of credit score, this is not a good move, but it will at least help them get rid of the interests, so that they can pay off the debt. However, the balance transfer fee which is sometimes 5% of the outstanding balance eats into the savings which the credit card customers hope to make.
Not all balance transfer deals involve complete transfer. A lot of credit cards, ask credit card customers to pay off up to 25% of the outstanding balance upfront before the deal can taken forward. This means that credit card customers might have to pay a hefty amount if they have a high outstanding balance.
Some credit cards promote their balance transfer fees by showing a promotional period of up to 21 months. Although many credit card customers are drawn into this claim, very few actually realize that it depends on the credit rating. Customers with bad credit often end up getting just 6 months of promotional period. If they don't realize this and go for the balance transfer, they might end up with a high outstanding balance on a credit card with a high interest rate.
Credit cards which offer provide balance transfer deals to credit card customers, try to make up for those deals through high interest rates after the promotional period. If the card holders are unable to pay off all their balance before that period, they might end up being charged exorbitant interests on their outstanding dues. Besides, there might not be any lucrative reward programs for such credit cards either, and hence savings on interests initially, is the only thing that customers can use in their favor.