card companies by transferring your balance from one card to another?
While many of these offers are truly great deals, balance transfers
and card-switching is not something to jump into, eager as you may be.
You need to do your homework first: Do enough research and
investigating in order to determine whether it in fact is worth it or
a good idea to make the transfer.
First, find out if it is in fact worth it. Generally speaking, these
attractive advertisements and super credit card deals advertise very
low introductory rates if you transfer your current balance from an
existing credit card onto this new one. You can stumble upon these
offers anywhere—online, in the mail, on a flyer or via a telephone
call from credit card company salespersons—and you need to determine
how great these deals really are, or if you'll just end up paying much
more in fees and interest in the long run.
Read the fine print. Read everything. Read it through several times so
that you make sure you understand what it is saying. It may appear to
be a bunch of financial jargon that you might not think is very
important, but the truth is, this information is valuable and critical
to your decision in whether or not you make the big switch. Call the
credit card company and ask any questions you might have. If the deal
is solid and they want to make a sale, generally they should be able
to help you out in any way.
What do you need to find out about the deal? Here is an example. Let's
say that the advertised introductory rate is 6% (a low rate) on credit
card B if you transfer your balance from credit card A, where you
currently rack up an APR of 18% (a standard rate). You come across
another offer, showcasing credit card C with an introductory rate of
9%. At first glance you may think, "Well, let's go with credit card
B—it's the obvious choice here." However, after reading the fine
print, you discover credit card B's special rate only last six months,
and afterward the APR is 20%, whereas credit card C's higher rate
lasts for a year and the interest rate after that is 18%, the same as
yours on credit card A.
In other words, you have to factor in a lot of variables when making
the decision to switch your balance from one credit card to another.
Besides comparing the introductory rates being offered, the length of
the offer and what the regular interest rate is, you'll also need to
take into account balance transfer fees, annual fees, late fees and
other fees, as well as whether the teaser rate applies to balance
transfers only or also purchases, among other considerations.
Something else to keep in mind is that you may not actually qualify
for the special rate being offered, depending on your credit history
and credit rating. Before you make the big plunge, make sure you know
exactly what you, yourself, will be getting. There may also be other
conditions. For example, some credit card companies may penalize you
for one late payment and take you off the introductory rate onto their
regular rate, which may be higher than your current card's rate.
However, many credit cards with these introductory rates offer great
deals for people interested in switching credit cards and transferring
their balance over and can be more than worth it. The important thing
is to do your research, read the fine print and ask questions to
determine which credit card and deal is the right one for you.
Once you've selected the right credit card offer, the next step is to
fill out the balance transfer application form completely and
accurately. Next, make the minimum payment on your original credit
card while you wait for the balance transfer to go through. When it
has gone through, the new company should send you a notice, after
which you'll need to verify the transfer with your old company so they
can send you a zero-balanced billing statement. Finally, cancel your
old card since you don't need it anymore—it will also save you some
temptation.
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