Save Money With Balance Transfers…Or Lose Big Trying! Save A Little Money
Balance transfer credit cards seem to get more and more popular every year! Each year, you receive a few new offers in the mail and often times may be tempted to take advantage. If used properly, you could really save a bunch of money in interest and other fees you may be being charged right now. But, if used improperly, you can find yourself paying back hundreds or even thousands of dollars more over the life of your debts than you would have if you kept all of your debt right where it is. This is why when people refer to balance transfer credit cards, they often call it a game, win or lose, it will be big! But if you win, you stand to save quite a bit of money. So, here are a few tips to help you win…
The Game Is Rigged Both Ways
As with any gamble, you find that one player generally has the upper hand in one way or another. This is no different when it comes to balance transfer credit cards. You are the player that has the upper hand. If you do everything right, you will always win. But, just like any good player, balance transfer credit cards know when to hold ’em and when to fold ’em. So, it’s important to remember that you won’t ever take a lender to the cleaner!
What Did All That Poker Talk Just Mean?
The bottom line is that if you are a good candidate for balance transfer credit cards and you use them properly, you stand to save tons of money. However, it’s always important to remember that lenders are in the industry to make money. So, the only way you are going to save is if it is going to be a mutually beneficial deal. For instance, you may get a 0% promotional interest rate for a year but, you’ll find yourself paying 5% of the transfer if you decide to transfer a balance to your new card…Not a bad savings but, the lender will always make something!
Comparing Properly Is The First Step To Saving Money
Before ever applying for any type of credit card or loan, it’s always important to take a look around and see what else is out there. Comparing the market gives you a competitive advantage. But, if you don’t compare the market, a decent looking add with 4 inches of fine print might just be the card you get stuck with. That being said, when you compare, you want to make sure to compare promotional and long term interest rates, fees, grace periods and payment terms.
Look For The Curve Ball
Every once in a while you find a balance transfer credit card that has a horrible surprise to it…one that may cost you hundreds or even thousands of dollars, it’s called retroactive interest rates. On cards that have these, you are lured in through the promise of 0% promotional rates for 12 or 18 months, in the hopes that you won’t read the fine print. Somewhere in a footnote that you didn’t read, it said that balances not paid back within the promotional period will be charged the standard interest rate from the original date of purchase! Yes, that can hurt so, make sure to read all the fine print!
Be An Aggressive Player
Aggressive payments can really go a long way when it comes to savings on debt with balance transfer credit cards. By sending in minimum payments, you are guaranteed to pay the standard interest rate once the promotional period expires but, by sending double or triple your minimum, you may have your balance paid off by the end of the promotion and not have to pay a dime in interest!
Balance Transfer Credit Cards Are Not For Everyone
After reading what I’ve had to say today, you may think that balance transfer credit cards are great. But, they do have a dark side and they are not for everyone. Common misconceptions of these offers being great debt relief options have lead many down a road to further financial hardship. That being said, if you think you might want to play the game, please take the time to get to know these credit cards before you actually apply for them. For further reading on this topic, please feel free to take a look at a recent article I wrote on my blog CNA Finance that discusses what these credit cards are in depth and unfavorable things you may find in the fine print. To read the article, click here!
Let’s Talk
Hey everyone, I’m Joshua Rodriguez, a personal finance blogger and journalist. Your support means a lot to me and, I have a great time in the conversations that I have in the finance community. That being said, if you have any questions, comments or just want to chat about an unrelated topic, by all means, leave a comment below or catch up with me on Google+!
Category: Credit Card
