Many consumers love taking advantage of credit card transfer offers. When doing a balance transfer, a customer can save a lot of money on interest. Of course, credit card companies rely on the fact that people will make mistakes. Here are five balance transfer mistakes to avoid.
Making charges: Once a consumer initiates a balance transfer, he or she must put the card in a sock drawer. Otherwise, the customer may unknowingly use the card. When this happens, the customer will pay the regular interest rate for the purchase. This is because the finance companies can and will apply payments to the balance transfer and not the recent charges. So one must remember to avoid using a card with an active balance transfer.
Initial fee: Finance companies usually charge a fee to initiate a balance transfer. The fee usually varies between three and five percent of the transfer amount. This can cause the balance transfer to be a bad deal. One way to combat this to read the fine print. Of course, one cannot avoid balance transfer fees completely. However, the consumer can save a lot of money by shopping around for the best rate.
Minimum payments: Unfortunately, many customers make the minimum payments. When doing so, the debtor will never pay off the debt. To take advantage of a balance transfer offer, a consumer must pay off the debt in a timely fashion. When paying the debt off in a timely fashion, the consumer will get the most out of the balance transfer.
Overall credit: Large lending institutions constantly look at the credit worthiness of their customers. For this reason, a borrower must never be late on payments. While it may seem far-fetched, it is true that credit card companies will change the terms even when the customer made the late payment with a different company.
Promotional period: Most balance transfers have a short life. Usually, the balance transfer offer will be for between six months and 12 months. When initiating a balance transfer, the customer must make a note on his or her calendar. When marking the date on the calendar, a consumer can make sure that he or she pays off the debt before the balance transfer introductory rate expires.
Credit card balance transfers are a great tool for consumers. However, when using a credit card transfer offer, a consumer must be diligent. When avoiding these common mistakes, a credit card holder will save him or herself a lot of money.