Transferring balances

You may have seen the advertisements for low interest rates on balance transfers but not know much about transferring balances and how it is done. It is actually a very simple process and one that can usually be done via the Internet or over the phone. The first thing you want to do before doing a balance transfer is read the terms and conditions of any offer you have received and ask a few questions.

  • When does the introductory rate expire?
  • Once the introductory rate expires, what rate does the balance revert to?
  • What does the introductory rate apply to, only balance transfers or does it apply to purchases as well?
  • Is there an annual fee associated with the credit card?
  • What other fees are associated with the credit card, such as late or over the limit fees?
  • Is there a balance transfer fee? (Most banks charge a percentage of the balance you are transferring over)

Once these questions are answered, really read through the fine print of the credit card before transferring balances. Much of the information may be hard to understand so ask questions to the credit card company whenever you have any. If you are considering becoming a customer, they should be more than willing to help you with any questions you may have.

Some credit card companies actually waive the fee for your first balance transfer, if that is the case, transfer your largest balance first so you are charged the balance transfer fee on the lesser balance when it is transferred over. Also look for credit cards that look at any other balance transfer besides the first as a cash advance. You may not receive the special interest rate on those and be charged a much higher rate. Avoid those if at all possible.

Also remember, just because you receive a notice in the mail that you have been approved for the special introductory rate, it does not mean you will actually get it. Credit card companies send these notices out all the time, but not everyone who receives them qualifies for the rate. Unfortunately, the only way to find out if you do qualify is to actually apply and have your credit checked.

The most important thing to remember when transferring balances is to continue to make payments on your old card until the transfer is complete. You do not want to get yourself in a situation where you are being charged fees for not making payments, which will damage your credit and cause your new credit card company to increase your interest rate before the balance transfer is even complete.