Interest rates are constantly changing and can
get completely out of hand. If your interest rates
are too high a good way to deal with it is to
get a balance transfer. You first need to shop
around for a card with a significantly lower interest
rate. Then you have that company transfer your
other balances to their card. Many companies have
a deferred interest or same as cash offer on balance
transfers, when handled properly this can save
you money as well.
Another way to handle increasing interest rates
is to contact the card company you are with and
ask them to lower your interest rate. Generally
you can do this every 6 months if you have a good
payment history with the company.
How To Transfer Balances
Balance transfer is usually conducted in one
of three ways:
- As a way to get new customers, credit card
companies will send out offers with low or zero
percentage interest rates for new customers.
Usually making a phone call or filling out the
paperwork is all you have to do. Watch for sneaky
- Once you have done your credit card comparison
shopping and found the card you want, just make
a phone call to the credit card company and
request the transfer. They will take care of
the details. You may be limited by the available
balance on the new card.
- Credit card companies occasionally send out
“balance transfer” checks or “convenience
checks”. These look like regular checking
account checks but are geared toward the credit
card. All you have to do is write out the amount
transferred and send it to the new credit card
company. These checks usually have an expiration
date so pay attention.
Something to watch for when shopping for balance
transfer rates is the” teaser rate”.
This is a low introductory rate used to entice
new customers. Credit card balance-transfer offers
with very low or even zero rates are still available
however these are short term rates that quickly
revert to the higher rates on the card. Make sure
you plan to pay off your balance before the low
rates expire. Write yourself a note so that you
know when they are due to change. Staying on top
of those dates can save you quite a bit of money.
While interest rates are always a big concern
and can cost you a lot of money be sure to watch
out for fees and transaction costs, these can
be even worse. When shopping for a credit card
always check the annual fees, and “transaction
fees” on your balance transfer. The transfer
fee can be as high as 4% and simply takes away
any savings you might realize on the transfer.
Don’t spend money to save money.
Some banks process transfers as cash advances
and cash advances frequently have much higher
interest rates than credit purchases. There may
also be additional fees hidden in the small print.
Cash advances don’t usually have a “grace
period” so they are accruing interest daily,
this too can add up to much more money than you
expected. Some banks will waive these fees; make
sure to ask them about it
Fees, fees and more fees, the important thing
is research and read the small print. Make sure
you know exactly how much your balance transfer
will cost. Then you can determine if this technique
it will actually work to save you money.
Balance Transfer Strategy
All this talk about balance transfers has a
point. Saving you money! To do this properly you
have to be wise and disciplined. Transferring
balances can save you hundreds of dollars in interest
charges or bury you in debt. So it is really important
- Do the research, find the right cards,
- Watch out for sneaky fees
- Keep track of the expiration dates, don’t
let these offers expire
- Stay ahead of the curve, start setting up
your next transfer before the one you have expires
- Pay your bills on time, if you don’t
these offers have huge default fees and everything
you tried to do falls apart.
Hints & Tips
- After the balance transfer, cancel your old
- Try to put all balances on one card, it’s
easier to keep track of this way.
- Don’t carry more than a couple of cards
with open balances.
- Keep one card for medical emergencies.
- Watch for sneaky fees.
- Pay early or on time.