The mailbox is full of credit card deals each and every week for consumers, claiming low interest rates, little or no balance transfer fees and many more advertisements to lure consumers. It is important to know some of the major balance transfer pitfalls that can find consumers with far more debt than they started with before transferring their balance in the first place.
Introductory Rates
One of the first places a consumer can get tripped up when attempting to transfer a balance is through introductory rates that are offered only on the initial balance transfer. This means if you had intended to transfer balances from three cards onto one, you will be charged your intro rate only for the very first card and a much higher rate for the additional two balances.
It Says 0%
One of the top balance transfer pitfalls that a consumer can be wrapped up in is the flashy introductory rate coming through their mailbox or flashing up on their computer screen. However, the real rate a consumer may qualify for could be completely different. Some card companies have a built in echelon of introductory interest rates, starting at 0% and up to 16.49% for example. This information is typically available in the terms and conditions prior to applying for the card. If you are aware of these varying percentage rates ahead of time, it can help you decide if you are really getting the best deal.
Automatic Increases
Some card users do not realize the impact a late payment or going over the credit limit can have on their balance transfer introductory rates. A single late payment can cancel your current introductory terms completely and place your new interest rate at one higher than the card you had transferred from in the first place. This is a balance transfer pitfall that consumers can actually mitigate by selecting a card with some flexibility- or forgiveness- in their terms and agreement statements.
You Were Never Late but the Rate STILL Increases
With the wide availability of information, one balance transfer pitfalls most consumers never even realize is how being late on one account can suddenly change your introductory rates on another. Some credit card companies state in their terms and agreements that negative activity with other creditors will in turn suspend the current introductory rates and cause an automatic increase to a much higher interest rate. If the late payment is a contested error, be sure to contact your new card provider directly, coming prepared with your formal, written dispute. This does not guarantee that they will reverse the increase but it is the best way to start the process if there has been an error.
It is important to remember balance transfer pitfalls when applying for a new card. Credit card companies have a vested interest in making money and they need your fees and interest revenue to do it. Keep in mind that there truly are beneficial balance transfer offers; you simply need to read the fine print and find the balance transfer credit card that best fits your needs.
Sheryl Platte is a freelance writer based in the Seattle, WA area. With ten years of business and industry experience, Sheryl focuses her writing on strategy and consumer information writing.
