Tricky parameters involved in balance transfers

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Balance Transfer Cards » Tricky parameters involved in balance transfers

Tricky parameters involved in balance transfers

The content is accurate at the time of publication and is subject to change.
Balance transfer credit cards often extend a lifeline to those credit card customers who are neck deep in debt. Those balance transfer cards that offer a zero percent interest rate during the introductory period, are especially helpful as they allow the card holders to stop worrying about the interests and instead focus on the credit card debt. However, balance transfer credit cards come with some sticky parameters and customers should especially be careful about the fine print. Here are some parameters they should pay attention to. Total savings during the introductory period The main reason cardholders prefer to go for a balance transfer is because of the attractive incentives usually provided during the introductory period. This is when the interest rate could be as low as zero percent, not just on the balance transferred but also on the purchases made on the credit card. So the customers could be looking at a substantial saving in terms of the interests. Credit card holders need to do a clear calculation of what they would save by the end of the introductory period, and analyze if the move from one card to another is worth the saving. Ideally one would expect to save in excess of a couple of hundred dollars in a year’s time with a balance transfer credit card. Length of the introductory period The introductory period varies according to the credit score of the individuals and is not same for everyone. So card holders should include that aspect in all their calculations before going for the balance transfer. This is often a feature that isn’t highlighted and one has to pay special attention to the fine print to ensure it is true. Extra costs Although balance transfer is equivalent to an interest free loan, there are a lot of additional costs that come with a balance transfer card. These additional costs eat into the savings made through initial incentives. Therefore the extra costs should be as low as possible. Two common costs are the annual fees on the new card and the balance transfer fees. The balance transfer fee is usually more than three percent, which could mean a substantial amount for a bigger outstanding balance. The annual fees should in most cases be waived off. If it is in the tune of at least 100 dollars then the total fees could easily exceed the interest saving that the customer makes, making the balance transfer offer a venture that caused a loss. Final interest rate Balance transfer credit cards are notorious for their interest rate hikes after the introductory period. If the interest rate is climbing steeply after the introductory period, and is even more than the current APR of the existing card that the customer is using then it advisable to stay away from the credit card. This is because; if the card holder fails to pay off the debt before the promotional period ends, the new interest rate could mean growing debt once again.

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.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Top 5 Cards for Travel from Our Partners: Summer 2018 – Expert’s Choice

Top 5 Cards for Travel from Our Partners: Summer 2018 – Expert’s Choice

Posted: February 12, 2018

The sun shines more and more each day, flowers are in bloom and you already feel how hot it is getting - summer is here. Summer holidays are almost here, and you are in need of dire preparation. You can lift in spirits and let CreditLand ... Continue reading
Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Posted: February 10, 2018

If you're trying to find the perfect rewards credit card, you might feel like you're drowning in options. There are just so many out there, and many of them look similar. This can make it tough to decide on a card. One thing people often ... Continue reading
Price Protection: Credit Cards That Will Refund a Price Drop

Price Protection: Credit Cards That Will Refund a Price Drop

Posted: February 8, 2018

Those who often find themselves buying stuff and then discovering that they could pay less for the same item they've just bought, will appreciate this credit card benefit – price protection. This is the least known and the most neglected ... Continue reading
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!