The first thing to know about balance transfers is that you will usually have to pay a transfer fee. Balance transfers are fairly common, and the main reason why people do them is to save money. There are many other reasons to do this, but the key reason is to reduce your current debt and improve your credit score. There are several things you should know before you start applying for balance transfers on your credit cards.
The first thing to know is that these transactions are reported to the credit agencies. If you have been missing payments or are late on your bills, then you can expect to see a negative mark to appear on your credit report. You may even find that the mark is one of many negative marks that are hurting your credit. This is because the credit card companies view credit reports as a form of consumer advertising. They are trying to get you to spend more money by promoting the credit card they are offering.
When you apply for a credit card, the company will usually offer you a 0 balance transfer fee. If you accept the offer, you are agreeing to pay the transfer fee. Many people fail to take advantage of the 0 balance transfer fee and end up paying hundreds of extra dollars in interest. The interest rate that the credit card company will charge you will depend on your credit score, your personal finances, and the balance of your credit card. There are other fees that you should be aware of, so make sure that you understand them as well.
One of the many fees you should consider is the annual fee. Balance transfers are not free; in fact, they can cost you a great deal of money if you do not follow the terms of the agreement. Before you sign anything, you should call the company to find out what the annual fee will be. You should also consider the credit transfer fee, which can sometimes be higher than the annual fee. These fees can accumulate to several hundreds of dollars, so you want to be careful when deciding if you really need to go through with this type of deal.
The number one reason that you should avoid balance transfers with companies that charge a 0 balance transfer fee is because you will likely pay a lot of interest over the course of the introductory period. This interest rate can be several hundred dollars higher than the average interest rate charged by credit cards. It can make it difficult for you to make your monthly payments, and it can damage your credit rating. If you can transfer your balance to another introductory offer card and avoid paying the balance in full, you can dramatically reduce the amount of interest you pay.
Another reason that you want to avoid 0 balance transfer fee credit cards is because you will probably be charged an annual fee for using them. This fee is often several hundred dollars. You can avoid this fee by transferring the balance to another introductory offer card, but if you choose not to, you will have to pay the fee each month. Most people don’t bother with this extra cost, but if you can find one that doesn’t charge an annual fee, this can save you hundreds of dollars a year. Make sure that you read all of the fine print before choosing the zero percent introductory offer.
Finally, credit card companies can charge an annual fee for balance transfers if you are not able to pay off your balance within the introductory period. This fee can be several hundred dollars. Before you sign up for any new credit card, you need to check to see if there are any annual fee charges or fees for balance transfers. You also need to find out what kind of grace period you have if you are unable to pay off your balance within this time period. A 0 balance transfer fee credit card may sound great, but make sure that you really need one before you choose this option.
Avoid balance transfer fee credit cards by educating yourself on credit and how it works. Also avoid any 0 balance transfer fee credit cards that claim to offer zero percent introductory rates. These are not the same thing!