The Top Ten Balance Transfer Mistakes to Avoid
Do you have credit card debt? If so, you’re like the thousands of other Americans in the United States who do. Credit card debt can stack up quickly without you realizing it. Unfortunately, once you dig yourself into a hole, it’s hard to get back out. A lot of this debt can is a result of balance transfer mistakes. This article will go over the top ten common balance transfer mistakes to avoid.
1. You Don’t Know What the 0 Percent Rate Ends
When you sign up for a balance transfer card, there is an introductory 0 percent interest rate. This offer is available for a number of months, usually ten to twelve, then it expires. Chase Slate is an example of a popular card for balance transfers. Another good balance transfer offer is the Citi Diamond Preferred Card. The goal is to pay off as much of your debt as possible within the promotional period. If you still have a balance once the promotional 0 percent rate ends, the interest will apply to whatever’s left.
2. You Don’t Shop Around Before Applying
If you don’t shop around, you run the risk of not getting the best offer. Some cards may only offer a six month zero percent interest rate. This is fine for some, but if you have a lot of debt, you want a longer 0 percent rate. A good example of this phenomenon is the Discover it Balance Transfer Card. There are two cards available and with almost identical terms. Discover has one that card offers eighteen months of interest-free financing on balance transfers and six months on new purchases. The other Discover card offers fourteen months of financing on both balance transfers and new purchases. If you didn’t shop around, you wouldn’t know this, and you might make one of these common balance transfer mistakes.
3. Late Payments
Once you apply and are approved for a balance transfer card, pay on time. Paying on time is always important, but with a balance transfer card, it is more important than ever. If you make the mistake of paying late, you could lose your zero percent interest rate. If you lose your promotional rate, the standard credit interest rate fees can be applied immediately to your remaining balance. Continue not to pay and you could end up with a penalty fee. This penalty credit card fee is usually around 30 percent, and this can add up quickly. This is one of the most common balance transfer mistakes people make every day.
4. You Buy Things on Your Balance Transfer Card
When you get approved for a balance transfer card, don’t add new purchases to the existing balance. You’re trying to get out of debt, and not add more on top of what you already have. If you don’t have 0 percent interest on purchases, you have a problem. You only get a grace period from interest if you pay it off each month. Your balance transfer card already has a balance on it. If you make a new purchase with the card, there is no grace period, and the interest starts stacking up immediately.
5. You Stop Making Payments on Your Old Card Prematurely
Balance transfers can take weeks to fully complete. If you don’t know this and stop paying on your old card, you could get hit with fees. Your old card could apply a late payment fee, and it will eventually transfer over. However, this is a balance transfer mistake you can easily avoid. It is always a good idea to call your old credit card company if you have a problem. Also, get an oral statement saying the balance is paid off. This statement will make sure there are no further problems.
6. Delay Your Balance Transfer
As soon as you get a balance transfer card; the clock starts ticking. You only get 30 or 60 days to do the balance transfer process. The longer you wait to transfer your balance, the less promotional time you have to pay it off. It is a good idea to move your balance as soon as possible. This ensures you don’t forget about it altogether, and you have the longest promotional rate possible. Lenders monitor your credit card’s interest charges daily. Each day you go without transferring the balance is another day they monitor your interest rate. Transfer you balance quickly to avoid making one of these balance transfer mistakes.
7. Doing a Balance Transfer When You Have Low Debt
If you have little debt and can pay if off quickly, you could be adding more charges by doing a balance transfer. There is usually a 3 percent balance transfer fee added when you switch cards. If you can pay off your entire debt in a few months, you could end up paying more.
8. Trying to Transfer a Balance Between Two Cards from the Same Lender
This mistake is a little more tricky because it’s not clearly spelled out. A bank will not do a balance transfer between two cards from the same company. They won’t do this because they want to get a new customer with debt. If they let existing customers do this, they’re losing money on interest charges. Your bank is in business, and they have to make a profit. When you’re looking at balance transfers, make sure the new card is different from your old one.
9. Adding More Debt Back to Your Old Card
It’s hard to resist adding new purchases back on an old card after it’s at a zero dollar balance. If you do this, you’ll set yourself right back where you were in the beginning. Your interest rate will start right away on your old card, and now you have two payments each month. Also, this is how you get farther behind, and deeper in debt.
10. You Assume You’ll get the Best Deal
The last standard balance transfer mistakes you can make is assuming you’ll get the best deal. Many 0 percent APR cards are for people with good credit to great credit. If your credit isn’t up to their standards, you might not get approved for the amount of credit you need. This mistake is why it is so important to shop around and read the terms closely. You want the best deal for your credit that you can get.
Avoid These Balance Transfer Mistakes and Become Debt Free Faster
This article has gone over the top ten balance transfer mistakes people make by attempting to get out of debt. If you follow this advice and avoid these mistakes, you can be debt free faster. This will allow you to get on with your life and use this as a valuable learning experience. You will have less stress and learn valuable finance managing skills.
CreditSoup® Balance Transfer Cards
CreditFast has reviewed the best balance transfer credit cards on the market. Some of the credit card offers are from our advertising partners. CreditFast has objectively reviewed the features and benefits of each credit card. We have chosen balance transfer credit card offers based on our editor’s recommendations.