Many Americans today are tired of fighting high credit card fees, late payments, and are stuck with high interest rates. Is this affecting you credit score? Why not lower your interest payments by transferring your balance to another card.
If you do this please be careful, as is better to be very disciplined due to rates changing periodically with no notice. Balance transfers are one the smartest and easiest ways to reduce credit card costs. Just be sure you understand the terms and conditions of the new card, so you can maximize your savings. This way you may be able to maintain a good credit score.
Before you run out and switch credit cards, consider whether you want to keep your current card. If you do, simply ask for a lower interest rate. If not simply cancel and pay off the balance if this is possible. Tell your credit card company you've found another card with a much lower rate and you'll have to transfer your balance if they can't cut you a deal. Balance transfers can provide consumers with a number of advantages. Transferring balances to a lower rate credit card can drastically reduce your interest rate and fees every month. This will allow you to get back on track.
Credit card companies charge varying interest rates on balance transfers and purchases. The most common rate is 0 percent for six through 12 months. But remember this can change as soon as you miss on payment or on late on a monthly payment. Transferring balances can also give you access to more perks.
For example, you may be able to get a new card that has no annual fee, a longer payment grace period or cash back on purchases and other rewards. Some cards also offer car rental insurance, identity theft protection programs and money saving discounts. These rewards come in handy when you really need them. It’s a neat accessory to have along with a credit card for emergency or pleasure purposes.
Credit card companies commonly use low interest rate balance transfers to attract new customers. There are three main ways to transfer the balance on a card. One way is by simply filling out the paperwork provided by your new card issuer. Or you can contact the credit card company that you want to transfer a balance to and make arrangements for a balance transfer. Banks generally treat balance transfers like cash advances and have similar transaction fees. There's no fee for balances transferred in response to special offers. For Example take Citi Platinum Select and many other companies, the transaction fee for balance transfers is 3 percent of the amount of each balance transfer, with a $5 minimum and $50 maximum.
An option like this one may save you a lot of money in the long run. In addition to standard transaction costs, banks also charge special fees that can take you by surprise. Some of the most common special fees are late fees . Which we all hate.
Some banks wait a few days before assessing a late fee, but many impose it the day after the payment was due. Companies either charge a flat fee, such as $10 or $15, or a percentage, such as 5 percent, of the minimum payment due.
Over-credit-limit fees are another disastrous fee added. Most cards assess a fee if you charge more than your credit limit. These fees are charged each time you go over your limit, so you could be hit with several of them during the same billing period. Banks typically charge $10 or $15 for this fee or up to 5 percent of the amount you're over your limit. These fees are in addition to interest charges. Lost card replacement fees is another one that many people probably have not even heard of. If your card has been lost or stolen more than once and you need a new one, some companies will charge you for a replacement. These fees are range from $5 to $10.
After you transfer balances, be sure to make all your payments in full and on time or you'll automatically be hit with higher fees. Be disciplined and try to always pay off the balance when you can. This will help your credit score.
Generally, there's no grace period for repaying balance transfers, so interest will accumulate immediately. (No interest will actually accumulate if you have an introductory 0 percent APR.) When making payments, it's important to understand that the payments you make will first be applied to balances with lower or promotional balances and then allocated toward higher APRs. That means you'll be paying down 0 percent balance transfers before you even touch the balance on regular purchases, which can be charged at a rate of 9 to 18 percent.
As a word of advice, consider using a different card for your regular purchases and pay off the balance each month, as stated before. This is a very important factor to remember. (HINT). Keep your balance transfers restricted to a separate card.
After the promotional period ends, check in to see what your rates have changed to.
You need to keep a close eye on the promotional period. As soon as it expires, normal interest rates will apply. Don’t be afraid to call our lender and bother them. That’s what they are being paid for after all. The standard variable APR for Citi Platinum purchases (8.99 percent) will be applied to all remaining purchase and balance transfer amounts. Likewise, the standard variable APR for cash advances (19.99 percent) will be applied to all remaining cash advance amounts. If you default on Citi Platinum's card agreement, the company can immediately increase the APR on all balances including any promotional balances to a variable default rate of 28.99 percent.
Your post-introductory APR will depend on your credit history and/or credit score. If this interest rate is significantly higher than the rate on your old card and you have a remaining balance, you'll wind up losing money. The point is to save money.
You have to keep up with all the changes in the annual percentage rates at all times. If they do change to a higher rate then you could always transfer to a new card. Just always be careful. Of course, you could always transfer your balance to a new card with a lower promotional rate that is intriguing. Again, just please always make sure to be careful not to entangle yourself in a vicious cycle that could backfire later on.
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