Balance transfer credit card offers are growing in popularity as more and more people find them useful for meeting their financial needs. These cards allow the cardholder to place the balance of a high interest credit card on a credit card with a low introductory balance transfer rate. If you are able to pay off the full amount of the balance transfer before the end of the introductory period, you will pay little or no interest on the amount transferred. While this sounds like it would be a great deal for anyone, it could end up costing you more than you think if you do not use the balance transfer credit card correctly. Here are some of the things that you should be aware of before transferring a balance to a balance transfer credit card.
Know What The Fees Are
It is important to know what fees you will be charged for using the balance transfer credit card before you begin to use it. Some of these credit cards charge the cardholder a balance transfer fee for transferring the balance, even if the introductory interest rate is zero percent. In the case of the last balance transfer credit card I signed up for, the fee for transferring the balance was 3% of the balance, added to the total amount to be paid before the end of the introductory period. If you are transferring a large balance, the balance transfer fee can be a costly addition and may reduce your ability to pay off the amount before the introductory period expires.
Know How Long The Introductory Period Lasts
Knowing how long the introductory period lasts is very important if you do not want to find yourself spending much more than you planned to pay off your balance. In the majority of cases, if the transferred balance is not completely paid off before the end of the introductory period, a double-digit interest rate is applied to the entire amount placed on the card. If the balance transferred was considerable, then the addition of the interest can come as quite a shock and make the balance harder to pay off.
Know The Consequences Of Putting Additional Charges On The Card
If the amount transferred through the balance transfer is less than the total amount of credit available on the credit card, you may be tempted to place additional purchases on the card at a later date. Adding purchases to the credit card balance may have several consequences, including having to pay high interest on the purchases immediately with no grace period since the transferred balance is already on the account. Read all of the terms and conditions of the balance transfer credit card carefully to ensure you know what actions will trigger high fees and interest rates.