Transferring a high interest charge card account balance to one with a better interest rate rate and/or better overall terms and features is usually a good way to reduce the amount of money you pay back on your existing debt. Depending on the “better” charge card account you select, you may also be able to benefit from a rewards program or gain other features you didn’t already have – including travel accident insurance coverage or an extended warranty program for new purchases made with the card. There are a few instances when a balance transfer is not the great deal it appears at first glance though, so it’s important to do your research before moving your accounts around.
If you want to utalize a balance transfer offer, use this guide for a smooth transition from one card to the other, and avoid costly or time consuming mistakes:
Step One: Find a better charge card account with a balance transfer offer.
There is no point moving money from one credit card account to another unless you are going to benefit from it in some way. Sometimes people are mislead by the introductory rates and promotional offers – so it is important that you dig a little beneath the surface to see what sort of rates you’ll be charged once the promotional period ends.
When looking at possible credit card accounts to replace your existing credit card account , make sure you find out the following information in order to make an accurate comparison between your existing card and the new card:
What is the intro rate and when does it end? Does the promotional rate apply to new purchases only? Does it apply to balance transfers? What is the credit card accounts APR (annual percentage rate) once the intro offer is over? Does the card have an annual fee? How much is it?
This is an important consideration when looking at a card to move your existing balances to – What does the card charge for a balance transfer fee? Many charge card accounts charge 3-4% finance charges for transferring balances. If you’ve got a $4,000 balance on your card that you’re moving to a new card, you’re looking at a fee between $120 and $160 just to move the balance. If you’re going to pay a balance transfer fee, you’re going to need to save a whole lot of money in interest over the life of the balance on the new card in order to make that fee worth it.
Step Two: What are your chances of getting approved for the new card?
Just because a credit card account offers a 0% or 2% interest rate on balance transfers does not mean that you will be approved for that offer. charge card accounts always put their best foot forward; but sometimes people are approved for the charge card accounts under different terms, based on their credit scores and payment histories. Take a close look, because often the charge card account you apply for will tell you that if you don’t qualify for the terms of the offer they will issue you a charge card account with higher apr rates or different overall terms. If this happens, will the higher rates be beneficial to you, or will you just end up with a second credit card account that charges a fortune in finance charges and interest rate and the temptation to spend more because you have a new credit line available?
Step Three: Apply
If you find a card with a great offer that you’ve compared closely to your existing card and feel that you will save money through the new, lower interest rate rate and/or through the rewards program the new card offers – AND you’ve considered your realistic chance of being approved for that card and all seems ready to go; it’s time to apply.
When applying for the new card, make sure to fill out the balance transfer portion at the time of application. The reason for this is sometimes the balance transfer offers are only good for immediate balance transfers that occur at the time of account opening. Balance transfers that are initiated later may be considered a cash advance and do not enjoy the same promotional terms your initial transfers do.
Step Four: Stop Using Old Card
If you’ve transferred the balance to a new and improved credit card account , stop using your old charge card account . Cut it up or put it away so you aren’t tempted to charge on it. If you transfer the balance and then continue to use your old card, you’ve completely defeated the purpose of moving the money and now have TWO credit card account s to pay off!
Now that you know what to look for in a balance transfer credit card, go to JemCreditCards.com. I advise Discover credit card accounts.
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