Several credit cards offer you the option of transferring balances from a high interest one to zero or low interest perks. These are usually for a promotional period which can last from 6 to 21 months.
Though the balance transfer cards are extremely valuable, you should use them efficaciously and avoid committing some common mistakes.
1. Assuming You will Receive the Best Transfer Deal
You may not always be approved for the balance transfer card you desired. For instance, people with only excellent credit are approved for 0% APR. You might think that your credit had been great however, having large payments due for a long time might have caused your credit score to drop.
Even when you are approved for the card, your credit line could be considerably lower than you need. In this case, you should apply for a second balance transfer card.
2. Attempting To Transfer a Balance From the Wrong Card
Some people forget that they cannot transfer balances between two cards issued by the same bank. So, if you have an outstanding balance on your RBC Cash Back MasterCard, you cannot transfer it to an RBC Visa Platinum Card.
It is also important to remember that every time you apply for a card, your credit score takes a slight hit. You can easily recover those points soon but you should still refrain from registering yourself for a card that fails to serve the purpose.
3. Negating Balance Transfer Fees
Almost all credit cards bear a fee when you make a transfer, while only some do not charge you transfer fees. These range from 3% to as high as 5%. If your balance is small enough for you to deal with in a few months, you are better off not transferring it.
4. Delaying Your Balance Transfer
You will typically have 60 days or 90 days to transfer your balance to the new card. As soon as the promotion expires, transfer the balance quickly to make the best out of the introductory period and cut down on any interest that may accrue. Transferring your balance early will also remind you about the deal and therefore, you will not miss it.
5. Misconstruing New Purchases
If you make a new purchase on your balance transfer card, it will be treated with a regular interest rate on your card unless the card offers 0% interest on purchases. Hence, you will end up having two balances on your card – the interest-free transferred balance and the new purchase balance.
6. Being Late with Payments
Paying your bills with the promotional balance transfer cards is crucial as if you are late, the 0% deal will be revoked. This will subject you to the regular higher interest rates on the card way before you are even prepared. On top of that, a late fee will be issued as well.
7. Ceasing Payments on Your Old Card Too Soon
Some cardholders do not realize that the balance transfers can take up to two weeks to be processed completely. Therefore, you should still continue to pay your old credit card without worrying about overpaying as the credit cards can refund any overage that might have taken place during the transition.
8. Using a Balance Transfer Card to Accumulate More Debt
Many consumers are so keen on seeing no balance on their old credit cards that they almost ignore their chance of being debt-free. Balance transfer cards should only be used to pay off all your debts without hindering your financial health in the long run. Using these cards only as part of the debt repayment plan is a wise decision.
Now that you understand the functioning of the balance transfer cards, you are free to establish some credit as a reward for freeing yourself from debts. In order to do so, click here or call +1855-550-5565 to talk to credit specialist today.