Balance Transfer Credit Cards – Is It A Game You Want To Play?
Balance transfer credit cards are one of the best ways for you to slowly eliminate credit card debts due to high interest. They help you consolidate your debts with one card that enable you to save money on interest charges. The biggest catch when transferring debt from different cards onto one is the 0% introductory rate. Most banks offer a 6 to 12 month time period at the 0% rate. Depending on the terms of the card it could be for purchases and transfers. Of course this is all that the average consumer sees and it looks like a great deal, but hold on. Consolidating debts is big business for credit card companies and they now charge for the privilege.
The transfering processes are not subject to grace periods and may take up to 6 weeks to complete. Yes, this means you still need to make payments on the cards your consolidating. A lot of the cards only offer the low rates just on the balance you initally transfered at time of application. Also, any balance you add to the card will be charged the normal interest which could be over 10%. What good is that 12 month period for now? The consolidated balance is not eligible for any type of rewards program awards unless otherwise noted. Don’t forget about the fees. In the beginning, people were consolidating debts all the time because it was easy to get approved on a new 0% card. The card issuers caught on to this and put the kibosh on it. They are now subject to fees in the amount of 3% of the transaction with a minimum of $10. What this means to you is that if you are carrying a large balance you could get charged a couple hundred dollars. Sure, your month to month bills are being charged 0%, but your first fee should be looked at as interest. See if it makes sense to consolidate or not with a calculator.
Balances are rising faster than consumers can pay them off. If you are like the 65% of Americans that carry balances from month to month then consolidating will make sense. These are great for people whose balances can be paid off in 6 to 12 months. Balance transfers are convenient but not a long term solution. A 0% offer on anything is an excellent way to save money, but misusing it can trap you in the long run. Playing the transfer game is not good money management, but if the potential to save you money in the long run is there take advantage of the offer if it is a good one. Be sure to apply for a low rate fixed credit card.
