Opt for a No Fee Balance Transfer and Save
Credit card holders are well aware of the endless stream of offers that they get for new credit cards. Nine times out of ten these offers usually go into the trash without a second thought. This is a bad idea. Not only is there the possibility of identity theft (a subject for another article), but many of those offers contain no fee balance transfers where you can save not only on the balance transfer but on the interest as well.
What is a Balance Transfer?
A “balance transfer” is where one credit card company makes a payment on your behalf for a portion or the entire amount of another credit card. Typically this is done to take built-up debt from a higher-interest card and put it on a lower, or zero interest card. This can be done either directly when the application is made (via electronic transfer) or it can be done through cash checks sent with your welcome package that you can use to pay your other credit card bills with. In order to provide the service, many credit card companies charge a balance transfer fee. Typical terms are a percentage of the loan with a minimum and maximum amount. Sometimes, though, the credit card company will waive the fee if the balance transfer is done within a specific time frame.
Limitations
Balance transfers are often limited to a maximum number of transfers. Also, many times the balances have to be posted within a time frame of opening the account. A typical time frame is 90 or 180 days. Finally, many banks will not transfer balances between their own accounts. For instance, American Express will not allow you to balance transfer one American Express balance onto a new American Express account, even if the accounts are held by two different people.
Questions
During the last decade, a lot of people got tripped up on credit card debt because they didn’t ask the relevant questions before hand. Cardholders should ask plenty of questions. For instance, what happens if the credit card balance ends up lower than the amount requested for a balance transfer? Some cards will decline the balance all together while others will lower the balance transfer request. Also ask about what qualifies as a late payment and what happens to the balance. Knowing these rules can help you save on your balance and pay off the debt a little bit quicker.