We help you in Consolidating your Debts

They come in the mail offering an easy way to consolidate credit card debt while saving money at the same time – credit card balance transfer offers. It may appear to be in your best interest, but credit card companies are in the business of making money and only do what will benefit them financially. Potential pitfalls are in the details and fine print. Before you take the bait and request a balance transfer, be sure you understand the risks.

Balance Transfer Fees

Not too long ago zero-fee transfers were easy to find and the best way to reap the benefits of a balance transfer. As credit becomes harder to come by, zero-fee offers are practically none existent. Most offers today include a one-time fee, typically a percent of the amount transferred. Fees range from 2 – 5% with a minimum of no less than $5. For a small transfer the fee is rather incidental, but if you need to transfer large sums of money, the fee can really add up. To protect yourself, look for an offer that caps the fee. The limit is typically between $50 and $150. Do the arithmetic before applying. Be sure the cost of the transfer doesn’t exceed the interest you would have paid keeping the balance on your current credit card.

Variable Interest Rates

Balance transfers are often accompanied by a teaser offer, which is a temporary zero or low-interest rate. What you may not know is that the rate only applies to the transfer and not to purchases made with the card. The interest rate of purchases is often as high as or even higher than your current credit card. If you plan to use the card extensively, a card with a high APR for purchases may not be your best bet. Balance transfers will only help reduce your debt if the new offer has an APR total that is lower than your existing card. After the teaser or introductory period is over, the interest rate will increase to the agreed amount. If you continue to carry a balance, you may be surprised at how much you’ll be paying in interest. To avoid the loss, be prepared to pay the balance off before the end of the intro period.

Order of Payment Allocation

Credit card companies make money by the order in which they post your payments. The balance with the highest APR attached to it will be paid last. So every dollar you send them will be applied first to the lowest APR balances, leaving the higher ones to continue to rack up interest. So be sure you understand the loss you will incur, if you continue to carry the higher end APR balance. So a balance transfer of $2,000 at 0% APR will be the first paid off; the $500 purchase made on the card at 23% APR will continue to collect interest and be the last to be paid off.

Late and Overdraft Fees

One of the simplest ways to make a transfer work for you is by making all payments on time. Missing a payment or making one late payment will result in the loss of your introductory rate and an immediate jump in interest. In conclusion, balance transfers are for people who are serious about paying off their debt. If you hold a credit balance, you are no worse off moving it from one card to another with a lower interest rate. Just don’t make the mistake of transferring your balance and using any remaining credit limit available to you. For the best credit card offers visit us at ASAPCreditCard.com. Apply for an instant approval credit card and find valuable information on 0%, air miles, instant approval, rebate and reward credit cards.

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