Balance Transfers: Are They the Best Option?
When you’re in credit card debt and you’re trying to figure out the best way to pay off those cards or escape those high interest fees a balance transfer could possibly help. Usually credit card companies will offer a special limited Zero interest rate for a period of 6 to 12 months for consumers that are seeking a way to eliminate high interest fees on their cards. This could give you the opportunity to transfer a high interest debt to the zero interest credit card and pay the debt off faster. While this sounds good, it’s important to know that it’s not for everyone. Below are some things you need to factor into your decision:
Pay Attention to the Offer Deadline
Transferring your high interest credit card to a zero-interest credit card is not forever! There is limited time for these types of offers and you should be aware of it. So, if you don’t have the funds to pay off the card within the specified time of the offer, you might find yourself stuck again with paying high interest rates.
There Could Be a Transfer Fee
Some zero-interest credit card offers charge a fee or percentage of the amount you’re transferring over, so it’s important to pay attention to the fine printing in the offer. If you have a high balance to transfer over, you could actually end up spending more in the long run.
There Could Be A Transfer Limit
Often a limit is imposed on the amount of money you can actually transfer over. So if you have multiple high-interest cards with balances – it wouldn’t be a wise decision to use this type of offer.
Zero-Interest May Only Apply to the Transfer Balance
The whole purpose for these types of offers is not in the best interest of the consumer. The bank or card company wants more credit card customers and they way they make money is through charging interest! Usually the zero-interest offers only apply to the transfer balance and not to any new purchases you might make with the new card. Also, if your transfer balance isn’t paid off by the zero-interest deadline, you will also be paying interest on that as well.
So, a balance transfer might be a good option if you are able to pay off the debt before the promotional deadline. If you are trying to figure out a way to pay off multiple card debt, you might also want to see if a personal loan with your local credit union or bank might be a better option if you have a good credit score.
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