What You Need to Know About 0% APR Balance Transfer Offers
You may have received an offer in your mailbox or via email for a 0% APR balance transfer when you take out a new credit card with a particular company or bank, and are wondering if this offer is too good to be true. Zero percent APR balance transfer offers can be worth looking at if you are carrying high interest credit card debt – but you must be able to read between the lines and really go over the fine print of the offer in order to make it worthwhile.
Terms of the Offer
As appealing as a 0% APR balance transfer offer may seem on the surface, wise consumers will do a bit of investigating before signing on the dotted line and accepting the offer. Some offers may feature a zero percent APR for a very limited (usually around six months or so) period of time, while some may give you this great (free) rate for longer. For consumers looking to pay debt off fast, such as within the amount of time that the balance will be billed at zero percent, these offers are ideal. If you plan to take your time paying off the balance, then make certain that the APR that you will be charged after the initial “welcome” period is not higher than what you are already paying. You must also look at how much it will cost to transfer your balance from your existing credit cards to a new card when determining if a 0% APR balance transfer offer is for you. Most credit card companies will charge some type of fee for transferring the balance to your new card. Take this additional cost into consideration when making your decision. Also look at these possible pitfalls for the offer you are reviewing:
• Many people transfer a balance on a 0% APR credit card and then continue to make new purchases on either the old card or on the new card. This can lead to a never ending cycle of debt. If you transfer the balance over, don’t make any new card purchases until you have paid off the balance in full.
• Check to see if the introductory APR on the 0% balance transfer offer reverts over to a higher rate. Many card companies will revert the account over to what is known as the “cash advance rate” after so long if the balance that was transferred is not paid off within a particular timeframe. This is the same elevated rate that you are charged when you do a cash advance – and can be quite expensive.
• Find out before taking advantage of the offer if you are required to pay an annual fee. A high annual fee can make transferring your balance over less of a good idea if your savings go down the drain with it.
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