Charles H. Miller
Balance transfer cards are great tools for getting out of debt. Misuse them and you could face penalties, with even more debt than you started with (before getting a card). We have identified 5 rules to follow to use balance transfer cards to your benefit…
1. Clear the debt before the 0% rate ends
Chances are you got yourself a balance transfer card to clear the outstanding debt. That is the point of this sort of products, and in that sense, you should pay as much debt as possible before the 0% rate ends. After that, you will typically end up with a rate in the 15%-20% range.
2. You must make minimum monthly payments
Or you could lose the cheap rate. It is a good practice pay as much balance as possible, but we do understand that’s not a viable option for everyone. You must remember that 0% rate isn’t yours forever and does come with a caveat — if you miss a payment (or don’t pay the minimum) you can lose it.
3. Do NOT spend too much with a balance transfer card
Although some of the balance transfer cards come with introductory 0% APR period on both purchases and balance transfers, this should not be the call to go on a shopping spree. Yes, you can use the card to make a big purchase and save on interest payments, but again, chances are you opted for it to decrease or completely erase your debt. So, don’t do it, unless you really have to…
4. Do NOT withdraw cash with a balance transfer card
Related to the previous point, do not withdraw cash with one of these cards. The 0% rate seldom, if ever, applies to cash advances. In fact, cash advances have their own (usually high) APR, and also include a fixed percentage that is applied to every cash withdrawal.
5. Do a research before applying for a balance transfer card
We usually say that you shouldn’t visit your bank’s website and pick the first balance transfer card you see. There’s no need to be loyal with any bank when you can get a better deal elsewhere. In that sense, you should check out offers from multiple credit card issuers and select the card that works best for you.
Where to start?
Start by checking the links below — you will find cards from a number of credit card issuers and get a better picture. You can compare few cards, and select the one that is best tailored to your unique needs. Good luck!
