Balance transfer cards can be godsend for those who have outstanding credit card debt, especially if the fee to transfer the balance is waived and the interest on the transferred balance is 0%. There are many good promotions out there that you can take advantage of today. However, along with everything else in life, it is vital that you make sure to read all the fine print before applying.
Zero percent balance transfer cards are helpful because you save money by not having to pay any interest on the balance. But at the same time, you need to be responsible and have a plan of attack in eliminating the credit card debt. Without a plan of attack, it could put yourself in a worse financial situation than you began with. That includes reading and understanding the fine print and adjust your plan of attack accordingly.
Fine Prints To Look For
1. Interest Rate After Promotional Period – During the promotional period, it’s zero percent (that’s why you signed up remember?). But after this period ends, all bets are off. The interest rates can go up as high as 22% or even higher. Discover® More Card – $0 Balance Transfer Fee provided the following fine print:
0% intro APR for 12 months from date of first transfer, for transfers under this offer that post to your account by July 10, 2012. After the intro APR expires, your APR will be 10.99% to 19.99% based on your creditworthiness. This APR will vary with the market based on the Prime Rate. (emphasis added)
Similarly, Citi® Platinum Select® MasterCard® had almost identical fine print:
0% introductory APR for 21 months from date of account opening. After that, your APR will be 11.99%, 16.99%, or 21.99%, based on your creditworthiness. These APRs will vary with the market based on the Prime Rate.
Because the interest rates are so high after the promotional period of 0% on balance transfer, it is vital that you do not have any balance when the 0% period expires. Either pay off your balance or transfer to another 0% balance transfer card.
2. Penalty For Late Payment – Understandably, taking advantage of this promotion requires the user to be responsible with the payments. If there is a single late payment, there will be a severe penalty APR that is much higher than the normal APR. Discover Card had the following in their fine print:
From up to 15.99% to up to 24.99% based on your creditworthiness and other factors. This APR will vary with the market based on the Prime Rate. This APR may be applied to new purchases and balance transfers if you make a late payment. If your APRs for new purchases and balance transfers are increased for a late payment, the Penalty APR will apply indefinitely.
In addition to this penalty, the credit card also holds the right to end any introductory APR on purchases and balances when a late payment is made. So, be responsible and not be late with any of your payments. Should you find yourself in this predicament, one thing you can do is give your credit card company a call and request a waiver on the penalty interest rate. They may or may not accommodate, but the worst thing they can do is say “No”.