Thinking About Transferring a Balance? Know What You are Getting Into Before You Complete the Transaction

When you receive an application from a credit card company in the mail, it may include an invitation to transfer your credit card balances to the new credit card. Or, you may even receive periodic invitations from your current credit card to complete a transfer at a low interest rate. You may be tempted to complete one of these transfers, and it is possible that performing a balance transfer is a good decision, but you need to know exactly what you are getting yourself into before you go ahead with the transaction.

Pay Attention to the Fees

While the credit card may be offering a balance transfer rate that is much lower than the interest rate you are currently paying, there may be a number of fees associated with the transfer as well. Generally, these fees are determined by calculating a percentage of the amount you are transferring and, while there may be a cap on how much you can be charged for a balance transfer, you can still end up paying over $100 to transfer your credit card balances. When all is said and done, the money you save on interest may be less than the money you are paying toward fees. Therefore, before you complete a balance transfer, be certain to find out about the fees that you will have to pay for the transaction.

Consider the APR

When you receive that enticing offer from the credit card company, the interest rate will likely be quite low. As a result, it will seem like a great idea to transfer your balances. Don’t just look at the introductory rate, however, as the ultimate rate of the credit card may be much higher than what you are currently paying. For example, you may receive a card with an introductory rate of 0% on balance transfers, but it reverts back to the standard 19.99% interest rate after the introductory period is over. Some cards will keep the low interest rate in place until the balance is paid off, but this is not always the case. Therefore, either make certain you pay the card off within that introductory period or don’t bother to make the transfer. Otherwise, you will likely spend more in finance charges if the ultimate APR is higher than what you are currently paying.

Find a Great Deal and Make a Plan

Some people try to evade their credit cards by jumping from one card to the next. Bouncing from one card to the next in an effort to keep your finance charges down will not pay off in the long run. Sure, it will help keep your finance charges, but the only way to take care of the problem is to work out a plan that allows you to get the debt paid down. So, rather than trying to work out a plan for transferring your balances over and over again, work on creating a plan that will allow you to get the debt paid off completely.

About the Author: Shannon Kietzman is a well known author and trusted resource. Shannon regularly writes for http://www.reliacredit.com/ . For more info and to order your credit report with FREE credit score please visit http://www.reliacredit.com/