Balance transfer is one of the ways in which you can pay down your credit card debt easily. You can transfer the balance from high interest credit cards to a card offering 0% introductory rate. Such cards don't charge any interest in the introductory period. Thus, the monthly payment gets lowered. Moreover, instead of making several payments towards different cards, one can make a single monthly payment. However, while trying to consolidate debt through a balance transfer, you need to check the do's and don'ts of balance transfer.
Do's and don'ts of balance transfer
Before you can sign up for a 0% balance transfer card, you should know the do's and don'ts of balance transfer. They are:
The do's 1. Compare offers - Before signing up for a particular 0% balance transfer card, you need to compare different offers. The terms and conditions vary according to the companies. Some credit card companies may offer a longer 0% introductory rate period. The transfer fees, and interest rate after the 0% period will also vary. Thus, it is wise to shop around for such offers.
2. Check credit score - Before applying for a balance transfer, it is better to check your credit score. If you have a low credit score, your application for the 0% balance transfer card may get rejected.
3. Read the fine print - Before getting the new 0% balance transfer card, read the fine print carefully. Carefully check the terms and conditions of the card. Also check by how much may the interest rate increase after the 0% period. In addition check the transfer fees. If needed, talk to the card company for explanations.
4. Pay the balance transfer fee – You will be charged a balance transfer fee, which you are supposed to pay.
5. Don't forget to check - After transferring the balance from the old high interest cards to the 0% balance transfer card, check with the new creditor, and also the old ones whether or not the money has been transferred properly.
6. Don’t transfer online - Some credit card companies offer you to transfer the balance online, when you apply online for balance transfer card. However, you should avoid doing so. It should be avoided because you won’t come to know about the long term interest rate that will be charged after the balance transfer period. Moreover, the old credit card companies may not allow you to transfer the balance online.
7. Don't miss payments - Once you get the 0% balance transfer card, try to maintain the on-time payments. If you fail to make the on-time payments, the bank can prematurely end the 0% introductory rate, and charge you a high interest. As a result, rather than paying down your debt, you are likely to incur more debt.
8. Don't use it for purchases - Don't use the 0% balance transfer card to make any purchases. If you use this card to make purchases, the creditor can charge a high interest on the card. Thus, you will be incurring a huge amount of debt.