Observing Balance Transfer Changes

Balance transfer is one of the most common solutions if interest on your credit card balance grows faster than you can pay it off, and your debt keeps growing more and more. In order to draw in customers from their competitors, credit card companies offer promotional 0% or low interest rates on your debt. And if you get this introductory low APR for say a year, your balance would be easier to manage.

Now credit card companies aren’t as generous with their promotional rates which makes it more expensive to move balances. Experts that track popular consumer products rates and prices recommend not to delay with transfers if you think it’s a good option for you.

A recent increase in balance transfer fees for some of the most popular cards in the category has drawn attention of analysts. Average transfer fee used to be around 3% of the transferred balance and now it went up as high as 5% for some of the offers.

Another change is that today credit card companies do not set a cap on how large the transfer fee would be. If before they would limit it to a certain amount, now they charge a full 4% or 5% of the whole balance, no matter how large it is.

Now if you plan on transferring your balance to a new credit card, make sure to read the fine print. Some banks have been advertising their products as 0% APR for up to (you put the length of the introductory grace period) and then in small letters they would add “depending on your credit history” without making it clear how long this 0% intro APR will apply to you. This promotional rate period can be cut for you and you will find out only after you get approved. And then they can list several possible APRs after the introductory rate is over which will also be based on your credit history, but even after you read terms and conditions, you still sometimes do not have an idea what terms you will get approved for.

Another option some credit card companies offer is transferring your balance while you making an application, before you even know you are approved and what credit terms you will qualify for.

Balance transfer can save you money and help you pay off your debt faster, but you have to be careful. Do calculations, study terms and conditions and read the fine print before you apply.