What to Avoid When Transferring a Credit Card

When you set out to transfer a credit card is easy to fall victim to a few common mistakes that can end up costing you hundreds or even thousands. What many people don't realize is that if the credit card company is making such an amazing offer it still has to benefit the bank in some way. Nearly all credit card providers assume people will not pay attention to the potentially costly details that go along with the offer. Take a moment to read this article and take note of some of the pitfalls you may encounter while transferring a credit card balance.

The first thing to look at this the balance transfer fees. It's rare for a balance transfer credit card to have no balance transfer fees. Often it's a flat fee such as $75 or $100 but in many cases it's a percentage of the total amount you are transferring. 2-3% is not uncommon. If you are transferring several thousand dollars or tens of thousands of dollars that fee can really add up!

The second thing to look for is the length of time for the promo rate. The promo rate may rate anywhere from a few months to indefinitely (for the life of the balance) It's always a good idea to compare rates and length of times that rate is good for from one balance transfer offer to the next.

The third thing to consider is the APR (annual percentage rate) charged after the promo period ends. In many cases the rate after the promo period is extremely high. It may be better to take an intro rate for 6 month with a low APR after than an intro rate for 9 or even 12 months. Take the time to do the math and quantify your savings.

The forth thing to watch out for is balance transfer caps. In this case the bank or credit card company only allows you to transfer a certain amount. Always check to see if there is a cap. If you're unsure call the credit card provider to clarify the terms. Always do the math to make sure you transfer do not exceed the limit.

Finally after the balance transfer is complete keep in mind that the terms generally place any new purchases behind the balance transfer and at the much high non-promo interest rate. This means if you make a purchase after the balance transfer, your next payment will not pay toward that balance. Instead it will take from the balance transfer balance. The best thing to do is keep another low interest credit card open for the purpose of new purchases.