subject: How To Perform a Balance Transfer Smartly [print this page] How To Perform a Balance Transfer Smartly
Doing a balance transfer may seem to be as easy as one, two, three, especially with the ability to do it online using online credit facilities. You do not even have to contact customer service or go to bank, but simply have all the information about your other credit card to do the balance transfer. Because of this, you might be tempted to habitually transfer balances from one credit card to another in an effort to juggle your credit card bills. This "remedy" to help you with your finances can actually lead to costly mistakes, especially if done hastily.
Before you transfer any balance from one credit card to another, you should always check and consider the following things:
1. Difference in interest rates - Find out the current interest rate you are paying on the balance you wish to transfer, as well as the interest rate charged for balances from balance transfers on the card you will be transferring it to. If you will be using a 0 balance transfer credit card, check the rates after the introductory period to ensure you don't get saddled with the same, or higher, rates afterwards.
2. Additional charges or fees - Find out if there are any handling fees for doing a balance transfer on the balance transfer card. Find out any termination fees and/or handling fees for taking your balance out of the other card. Factor these fees into how much you project your savings will be if you do a balance transfer.
3. Sufficiency of credit limit - Always check if the credit limit on the card you will be transferring the balance too is enough. By enough, this means that you should still have enough credit limit after the transfer to use the card, since you don't want to have to resort to using the high interest card.
4. Penalty for late payment for transferred balances - Aside from the usual late fees that will be charged to you if you pay your credit card bill, balance transfer credit cards usually stipulate that you will lose the privilege of availing of their zero or low interest rates for balance transfers. Find out if this is the case with the card, and honestly assess whether you see yourself making a late payment anytime in the near future. Remember, if you have very bad payment habits, the benefit you expect to get from doing a balance transfer will be nullified as soon as you miss out on one payment.
