0 credit cards | How to Use A 0 Balance Transfer Credit Card Without The Risk

How to Use A 0 Balance Transfer Credit Card Without The Risk

If used correctly, a 0% balance transfer credit card can be a useful financial tool. However, to maximize the benefits of a low interest credit card, you have to understand the terms and conditions of the offer in great detail.  After all, the devil is in the details.  Here are some of the important questions that you need to answer by carefully reviewing the fine print.

What Is The Expiration Date Of The Introductory Period?

Find out whether or not the introductory rate ends during a billing cycle.  If the rate ends within a billing cycle, you will need to actually pay off the credit card balance in the preceding month to avoid interest rate charges.  Look for the introductory rate expiration date in the credit card agreement or call the credit card company and ask.

What Is the Balance Transfer Fee?

With the recent changes in the credit card industry, balance transfers have begun to vary widely from the (once standard) 3.0%.

In fact some 0 balance transfer credit cards carry a 4-5% balance transfer fee.  This raises the “effective” interest rate considerably particularly if the fees are not capped at $50 to $75 as was once standard in the industry.

If you make multiple balance transfers, those fees can substantially undercut any savings that you realize from the 0% interest rate balance transfer.

What Is The APR On Convenience Check Balance Transfers?

While convenience checks can be a great way to access your 0% interest credit line, the terms for using them are often different from balance transfers by phone.  It is imperative that you carefully study the fine print on your 0 balance transfer offer.

Often, convenience checks are treated as cash advances and the 0% APR introductory rate may not apply.  Even if the rate does apply, the balance may be subject to a the (often very high) interest rate for cash advances after the introductory rate ends.

So, if this is the case, it is very important to be able to pay the entire balance by the end of the introductory period.

What Causes The 0 Balance Transfer Rate To End?

To win the 0 balance transfer credit card game, you must impeccable financial discipline.  If you make a mistake and default on any of the terms of the credit card agreement, it will usually trigger a large rate hike.  I have seen credit card agreements that punish a late payment with an penalty interest rate of 28%

Here are some of the common reasons that will trigger a default rate hike:

  1. Failing to pay the minimum payment by the due date and time
  2. Exceeding the credit limit on the account
  3. Failing to have a check with your payment honored by your bank
  4. Failing to make payments to another creditor on time, if the record of this shows up on your credit report.

How Does The Credit Card Company Apply My Payments?

Oftentimes, a consumer will accept a 0 balance transfer offer and consolidate their credit card debt onto the card.  Only later, does the consumer find out that the terms of the credit card agreement are such that all payments are applied to the 0% APR balance first.  The consumer is left saddled with a high interest balance at the end of the introductory period.

So is you take advantage of a 0% interest balance transfer, pay off any other outstanding balances on the card before making balance transfers.  Then use another credit card for new purchases.  Otherwise, be prepared to address a residual balance accumulating credit card interest at rates as high as 19.99%

Read The Fine Print In Order To Leverage A 0 Balance Transfer Credit Card

Take note of the introductory period and the balance transfer fees before you initiate the balance transfer.  Consider the implications of using convenience checks.  But most of all exercise the financial discipline to avoid triggering a ridiculously high default rate.

In short, exercise good judgment and sound financial discipline and you can leverage the power of a 0 balance transfer credit card.

  • Share/Bookmark

Related posts:

  1. 0 Balance Transfer Credit Cards Guide In today’s credit market, consumers are inundated with seemingly...
  2. Using 0 APR Credit Cards For Debt Consolidation The economy is in a slump, we are funding huge...
  3. Balance Transfers Using 0 Interest Credit Cards Did you know that even in this crazy credit market,...
  4. Which Is Best? A 0 APR Credit Card Or Low Interest Credit Card? Even in these tough economic times, you can still find...
  5. How To Use 0% Credit Cards To Eliminate Debt 0% APR credit cards can save you lots of money...

Related posts brought to you by Yet Another Related Posts Plugin.

Filed Under 0 APR Credit Cards, Balance Transfers | Leave a Comment

Tagged With , , , , , , , ,

Comments

Leave a Reply