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Are
you staring at that attractive advertisement for
switching
credit card
companies by transferring your balance from one
card to another? While many of these offers are
truly great deals, balance transfers
and card-switching is not something to jump into,
eager as you may be. You need to do your homework
first: Do enough research and investigating in
order to determine whether it in fact is worth it
or a good idea to make the transfer.
First, find out if it is in fact worth it.
Generally speaking, these attractive
advertisements and super credit card deals
advertise very low introductory rates if you
transfer your current balance from an existing
credit card onto this new one. You can stumble
upon these offers anywhere—online, in the mail, on
a flyer or via a telephone call from credit card
company salespersons—and you need to determine how
great these deals really are, or if you’ll just
end up paying much more in fees and interest in
the long run.
Read the fine print. Read everything. Read it
through several times so that you make sure you
understand what it is saying. It may appear to be
a bunch of financial jargon that you might not
think is very important, but the truth is, this
information is valuable and critical to your
decision in whether or not you make the big
switch. Call the credit card company and ask any
questions you might have. If the deal is solid and
they want to make a sale, generally they should be
able to help you out in any way.
What do you need to find out about the deal? Here
is an example. Let’s say that the advertised
introductory rate is 6% (a low rate) on credit
card B if you transfer your balance from credit
card A, where you currently rack up an APR
of 18% (a standard rate). You come across another
offer, showcasing credit card C with an
introductory rate of 9%. At first glance you may
think, “Well, let’s go with credit card B—it’s the
obvious choice here.” However, after reading the
fine print, you discover credit card B’s special
rate only last six months, and afterward the APR
is 20%, whereas credit card C’s higher rate lasts
for a year and the interest rate
after that is 18%, the same as yours on credit
card A.
In other words, you have to factor in a lot of
variables when making the decision to switch your
balance from one credit card to another. Besides
comparing the introductory rates being offered,
the length of the offer and what the regular
interest rate is, you’ll also need to take into
account balance transfer
fees, annual fees,
late fees and other fees, as well as whether the
teaser rate applies to balance transfers only or
also purchases, among other considerations.
Something else to keep in mind is that you may not
actually qualify for the special rate being
offered, depending on your credit history
and credit rating.
Before you make the big plunge, make sure you know
exactly what you, yourself, will be getting. There
may also be other conditions. For example, some
credit card companies may penalize you for one
late payment and take you off the introductory
rate onto their regular rate, which may be higher
than your current card’s rate.
However, many credit cards
with these introductory rates offer great deals
for people interested in switching credit cards
and transferring their balance over and can be
more than worth it. The important thing is to do
your research, read the fine print and ask
questions to determine which credit card and deal
is the right one for you.
Once you’ve selected the right credit card offer,
the next step is to fill out the balance transfer
application form completely and accurately. Next,
make the minimum payment
on your original credit card while you wait for
the balance transfer to go through. When it has
gone through, the new company should send you a
notice, after which you’ll need to verify the
transfer with your old company so they can send
you a zero-balanced billing statement.
Finally, cancel your old card since you don’t need
it anymore—it will also save you some temptation.
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