Balance Transfers – know what you’re getting into!

Balance transfers when done properly can save hundreds of dollars and help to clear debt much faster. However, there are a few things you need to understand to avoid getting into trouble.

• Check the balance transfer duration
  Most balance transfer offers last for 6 to 12 months, then revert back to the standard variable interest rate. Usually this rate is around 17 percent or higher. Make sure you are clear on what the current rate is to give you some idea as to what you will pay when the offer expires.
• Look out for hidden fees
  Some credit cards charge a fee for transferring balances. It is usually under 5 percent, and many have a limit of $25 to $50. Be sure to make enquiries to find out if any transfer fees apply.
• What does the 0% or low percent balance transfer rate cover?
  Many credit cards offer the balance transfer rates exclusively for balances transferred from other credit cards. What most people forget is that any new purchases will be charged at a higher interest rate. And most importantly, any payments recieved will first be applied to the transferred debt, meaning that any new purchases will be charged at a much higher rate and will continue to accrue interest. It is wise to apply for a balance transfer offer and have another low fee credit card to use for everyday purchases.
• Never miss a payment
  Avoid missing payments as this can cause your balance to revert to a higher interest rate. Make sure you are fully aware of the terms and conditions for late payments before you sign up.

As you can see, Balance transfer offers have a few hidden traps to be aware of. However, if you understand all the pitfalls and avoid them, then a good balance transfer credit card can help save you loads of money.