For many consumers Balance transfers are one of the best credit card features. The best part of this feature is that if you do not like your current credit card terms, you can easily move your balance to another credit card issuer. Balance transfers are always considered as a good deal. Through balance transfer debt consolidations one can also get help in coming out of credit card debts. But at the same time they can cause problems too. It is important for you to know the most important credit card transfer mistakes before making them yourself.
There are 3 most common credit card balance transfer mistakes that you ought to make and tips how you can avoid these:
Mistake 1: Too often you transfer your credit card balances
Balance transfers are the best fix to come out of credit card terms you are not comfortable with. Let’s take an example here. Suppose you have few more months to pay off your current balance but 19.89% of interest is causing havoc for you. In this case a balance transfer to a card offering you 0% interest on balance transfers for say 6 months would prove more beneficial for you. So, you would have at least 6 months to pay off the debt interest. The problem arises when you decide to pay of the debt and you transfer as soon as your offer expires.
You should be aware that each and every application you make it keeps on adding in your credit file for several years. Creditors will get an idea what you are doing and they will get a clue that they won’t be earning any profit from this relationship because as soon as interest kicks in you ll bail it. Due to this you will hurt your good chances of securing good credit when you ll really in need of it.
So to avoid making this mistake transfer your balance only once at a time and make sure you come up with a realistic plan to pay off the balance in the introductory period only.
Mistake 2: You start avoiding the fees
Often it happens you get excited with the 0% interest balance transfer card and you forget about the fees involved with it. For example: You are always charged a balance transfer fees of say a dollar or the percentage on an amount you transfer. You might be liable to pay an annual fee on your new cards also.
The only conclusion will be you might end up in paying the fee amount more than you would have paid in interest when you were with your 1st credit card company. To avoid this mistake the only solution is that do not hurry with any credit card offers. You should review their terms and conditions properly and figure out in advance how much it would cost you.
Mistake 3: you forget your end date of the introductory offer
It night happen that you have got a new credit card, though there is some balance left in the older one. Suddenly after few months you remember that your card came with a special feature with a transfer rate of 2% for 6 months. So what will you do? You will take an advantage and transfer your old balance immediately. Why you would do this? Because you assume you have 6 more months to pay off the balance before the rate of interest increases. You could be wrong too.
Do you know that the balance transfer introductory periods often starts with your date when card application is approved or from the date it is issued. You should keep this in mind that if you card is approved a month before your transfer you would left with only 5 months to pay off the remaining balance at the introductory rate and not 6 months.
It is important for you to read the terms and conditions properly not only at the time of application but also at the time when you decide to transfer the balance.
You should never make any financial decision on a whim. It is better to review your credit file on a daily basis, so that you can easily decide the day of application of a new credit card.
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