Balance Transfer Credit Cards Can Save You Money But…Use Caution!
Hey everyone, Joshua Rodriguez here again. Thanks for joining me for another post here on Save A Little Money! I’ve talked about all kinds of ways to save money from using coupons to reducing interest rates through negotiations with credit card lenders. Today, I’ve got another way to save money but, please remember to use caution! Balance transfer credit cards are going to be today’s topic of discussion. They’re a great way to save money but, they’re also a great way to lose it! So, here are a few things that you should know…
What’s So Great About Balance Transfer Credit Cards?
Balance transfer credit cards are designed to save you money. Well, at least most of them are…but…we’ll get to that later. Anyway, most balance transfer credit cards offer incredibly competitive interest rates and fee structures. The best part about them is that they allow you to use them to pay off other cards. So, it’s pretty simple to grasp the concept. Get a new credit card with incredibly low interest rates and pay off the old card with high interest rates…a no brainer right? WRONG! There is much more to these offers than what meets the eye.
Lenders Are In Business To Make Money
Before you get too excited about the concept of saving money using balance transfer cards, it’s important for you to remember that lenders are in business to make money…not spend it! With that being said, there is no such thing as a free balance transfer credit card. No matter how hard you search for one, it just doesn’t exist! Even though you’ll come across tons of offers that promote 0% interest rates for a small period of time, it’s important to remember, the devil is in the details!
Think Long Term First…Short Term Last!
Because there are offers with promotional rates that will take your breath away, it can become hard to concentrate on the important factors as you compare balance transfer credit cards. I know, I’ve talked to several clients who said something like “I just saw the 0% and figured we were good to go. I didn’t see the 22.24% standard rate, the retroactive interest disclosure, the $399.00 annual fee. I didn’t see any of it!”. It really happens all the time. So, while you compare balance transfer credit cards, make sure to think about things like standard rates, fee structures and any sneaky disclosures. To be simple about it, just read every single word on the terms and conditions. That will give you everything you need to know!
Watch Out For Retroactive Interest Rates
Now, I may get a bit emotional here so, please excuse me! That being said, some lenders really are great but, some are nothing more than con-artists looking for a legal way to get one over on consumers. And, they are really good at it. I mean, these scum can find their way around just about any lending law and, if they can’t, they can pay a lobbyist to go to D.C. and change the law for them. One of the practices these horrible lenders take part in is called retroactive interest, let me explain…
The lender will promote a 0% interest rate for a predetermined period of time. Usually, that period of time is somewhere between a year and a year and a half. Somewhere in the fine print, these bait and switch lenders will put…”If the full balance is not paid off within the promotional period, the borrow will be responsible for accrued interest without regard to the promotional rate.” or something of that sort. That simply means that all the interest that you saved for transferring is now going to be charged. Every penny of a year or a year and a half worth of interest is added to your balance! There are a few things like this but, that’s a whole new article in and of itself. That being said, make sure that you run a fine toothed comb through the terms and conditions of any offer you’re considering applying for!
Not All Lenders That Provide Transfers Are Scum
I want to leave you with a bit of good. And, it’s true! The bottom line is that for every scum of the earth lender you find out there, there’s 10 or 20 great lenders. Balance transfer credit cards can help you do tons of things, as long as you choose the right offer. That being said, go ahead, save the money! But, while you compare, do yourself a favor and make sure to pay attention to every word in the terms and conditions for the card!
And That’s About It
Thanks again for taking the time to read my article here today. I’d love to know what you thought. If you have any questions or concerns, please feel free to leave a comment below. I’d love to chat!
Category: Credit Card, Family Finances
