Balance Transfer Credit Cards – Some Things to Consider Before You Apply

The reason for getting a balance transfer credit card is, more times than not, to save money by transferring a balance from a high interest rate credit card. It sounds like a simple enough concept, but it doesn’t always work that way.

For instance, if the applicant has a low credit score then they will not qualify for the card to begin with. And unfortunately, many times the reason that the cardholder has a high interest rate is because of their poor credit score.

Another factor to consider is that many credit card issuers have lowered credit limits for both existing and new account holders. That means that you may already have a balance that exceeds whatever credit limit the new issuer is willing to grant.

That doesn’t necessarily mean that you cannot transfer a portion of the balance, so for the remainder you will still have to either pay it off in full, or keep that account open and continue to make payments on it.

Even for those individuals that have good to excellent credit, they are finding that transferring balances from one issuer to another is not nearly as inexpensive as it was just a few years ago.

Balance transfer fees are now the norm across the industry. In fact, I don’t even know of any cards that do not charge a balance transfer fee. They are pretty much mandatory across-the-board. And they are not negotiable.

As of this writing both Chase and Discover charge 5% of the balance transferred. Bank of America charges 4% while Citi and American Express charge 3%.

As you can see it has become rather expensive. It still may be a good deal for you, depending upon your particular situation though. It’s all a question of doing the math and seeing whether or not it is worth it.

Some cards offer 0% APR introductory rates for up to 12 months. The savings on interest from that alone may justify paying the balance transfer fee upfront.

But be warned, being late on just one payment will make the introductory period null and void and your interest rates will skyrocket. Also, don’t expect to see any rewards points for balances transferred. Credit card companies just do not give them.

So as you can see, making balance transfer credit cards work for you depends on several factors. Take the time to carefully consider these important points and carefully compare credit cards to see which one works for you.

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