Things to Know Before Applying for a Balance Transfer Card
If you’re having trouble reducing your credit card debt, or if you’re paying high interest rates on your outstanding balance, you could be paying more than you need to. A balance transfer credit card can be a great way to pay much less interest on your debt as well as begin repaying the amount you owe more quickly.
However, there are some things to know before applying for a balance transfer card.
How Long Will the Low Interest Rate Last?
One of the more important things to know before applying for a balance transfer card is exactly how long you’ll be able to benefit from the low interest rate. While most of these deals offer low rates that sound very enticing, they may only last for 5 or 6 months.
Once the low rate expires, your balance amount remaining will be charged at the higher standard purchase rate. If you haven’t paid off much of your original balance, you could find yourself back at square one.
It’s important to be disciplined about putting your interest savings back towards paying more than the minimum payment due each month. This way you’ll reduce your outstanding balance far more quickly.
Be realistic about whether you’ll be able to repay the entire amount you owe in full or not before the introductory period ends. If you know you can’t repay the entire amount in this time, perhaps shop around for a longer deal, or even a life-of-balance deal.
What Fees Are Associated With Your Transfer?
Another of the things to know before applying for a balance transfer card is whether you’ll be charged any fees. You may find that some card providers will charge a transfer handling fee that could be added to your original balance amount. One way to avoid this is to apply for a no balance transfer fee credit card.
You may also find that your card will have an annual fee charged to your account.
Be sure you understand how much your fees and charges will be to ensure that you’re not paying more than you need to.
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Posted on Wednesday, September 15th, 2010 at 12:09 pm
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