5 Easy Tips for to Save Money on Credit Card Balance Transfers
In today’s financial market more and more people are turning to credit card balance transfers instead of the traditional home equity lines that they have been used in the past. During the refinance hay-day throwing a tax deductible line of credit on the home to wipe out the credit cards was a no-brainer. Nowadays, shrinking home values and a turbulent secondary market are causing most banks have to hold these loans as opposed to selling them. This means the HELOCS of yesterday are only available to those with impeccable credit who have an abundance of equity in their homes.
Luckily, interest rates are low and balance transfers are a pretty good alternative if your credit card debt is out of control and need some help. This being said there are a few things that you want to look out for when transferring credit card balances from one card to another. The golden rule is that when you use a balance transfer card as an avenue to pay off balances on your other cards let this be your sole purpose. Make a budget and timetable to pay off the debt where there is a beginning and an ending payment otherwise you may get yourself into deeper debt.
Things to look for when transferring credit card balances:
Life of Balance Transfer cards – Life of balance credit cards are just what their name implies, they offer a low rate that applies to the balances you transfer within a certain time period. What you want to look for is a fixed rate that will not fluctuate over time. Depending on your credit level these may not be available to you, however if they are we highly suggest that you seek these cards out. The “gotcha” with this class of cards is that they usually will give you an extra thousand or two on your limit in hopes that you spend it at a higher interest rate, and most people do.
Again, we suggest that you use balance transfer credit cards for the single purpose of transferring higher interest credit card balances to a lower fixed rate. Once the transfer is completed, we recommend that you shred the transfer card and the one you transferred from to keep yourself from using them again. Over 75% of people that transfer balances use the transfer card and the old card again and end up owing more money than they did before the transfer. If the cards do not have an annual fee keep the accounts open for emergencies but shred the cards to keep yourself honest.
The Fine Print – If credit card issuers are similar in one area it is most definitely their fees and the fine print. It seems like they have fees for everything including one for on-time payments. Seriously you need to read the fine print and weigh the fees that apply for balance transfers, late payments, grace periods and other “gotchas” like universal default clauses. Over 80% of people that apply for credit cards will not read the fine print from beginning to end only to be surprised when their bill arrives in the mail. Most credit card websites offer handy calculators to help you calculate the best deal considering all of the fees.
Most credit cards have reduced the grace periods for repayment from 30 days to 20 days in an attempt to earn more fees and interest. If you are like most people, including yours truly, you pay your bills at a certain time of the month that usually coincides with your pay periods. The problem with this is that the 20 day grace period is relative to the due date of last month’s charges and is forever changing. If you pay your bills once a month like I do this will cause you to get late payment fees and could even trip the universal default clause which brings me to my next topic.
Universal Default Clauses – A universal default clause is a nasty little trick that credit card issuers use to jack-up your rates and fees to intolerable heights. If you look at the top of the fine print on each credit card you will usually see the regular APR and one below it that is through the roof. The one below it is the rate you will get should you pay late or even if your credit deteriorates. These clauses range from annoying to nasty and most states are trying to outlaw them but the majority of credit cards still have them.
The only card issuer that I can think of that doesn’t have this clause across the board is Capital One. I’m sure there are others but the clauses differ from issuer to issuer and card to card. Read the fine print for each card you are considering, see what their rules are that will trigger this clause. Some are mild which apply only if you are habitually late, where others monitor your credit and can jack up your rates and fees if your credit is deemed riskier than when they issued the card.
Introductory & Variable Rates – Beware of the asterisks. When you see one of these next to an interest rate you can bet it’s going to change on you. Most cards will advertise 0% interest on balance transfers 12 – 15 months but have cute little asterisks next to the rate. Find the fine print; chances are that your sexy 0% rate is going to morph into a giant wallet munching monster after the intro rate is over. Find out what the adjusted rate will be.The “gotcha” here is that most people know their rate will adjust in the future but they rationalize the transfer thinking that they will have the balance paid off in that time frame. Chances they won’t and the credit card companies know this. How else do you think they can offer 0% interest rates?
Variable rates are almost inescapable because 95% of all cards have variable rates. The ones that do not have them are hidden deep within most websites and offer very few frills. The reason they are hidden is that they are a little tougher to qualify for and offer lower profit margins to the issuers. When searching credit card websites take an extra minute to go all the way to the last page in each category, you may be surprised what you will find. Most credit card websites are arranged with the most profitable credit cards on the first few pages, these are rarely the best credit cards.
Reward Cards – If you are using your balance transfer card as you should, the bells and whistles on reward cards shouldn’t concern you. The bells and whistles cost you more, period. They cost the issuer more and they pass the cost right back to you. If you stay true to the purpose and transfer your balances in order to pay them off you should get a plain-Jane generic card without the usual frills hat comes with most cards. The only frills you should seek are the life of balance feature, fixed rate and a manageable or nonexistent universal default clause.
In closing I hope these tips help you get your very best deal should you decide to use a balance transfer card. This category of credit card is becoming more and more popular every day due to the financial chaos surrounding us today. This is generally a good thing though; this causes the card issuers to come up with different cards that offer better deals to keep up with their competition. Just remember the golden rule, only use balance transfer cards with a specific plan to pay off a balance. If you are “robbing Peter to pay Paul” the credit card companies will usually win in the end. Remember, Las Vegas wasn’t built on winners and neither are large credit card companies.
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The Obama administration is ramping up their campaign to crack down on credit card companies. President Obama opened the possibility of prosecuting officials from the Bush administration who authorized vicious interrogations of terrorism suspects. Obama celebrated Earth Day and announced his alternative energy plan at a former Maytag plant that now makes wind power parts. He also planted a tree in Washington along with the First Lady and some volunteers.
Help answer the question about credit card
Can credit card companies close your accounts without warning? How does it affect your credit score?I received a letter in the mail from Juniper (iTunes Rewards) stating that they have closed my credit card account due to inactivity. I opened the account about 18 months ago and have never actually used it. Can they close my account just like that without any warning? How should I handle the situation? (Is there anything I can even do?)
Also, I know that closing credit card accounts lowers your credit score. Does anyone know how much mine will be affected?
October 27th, 2010 at 8:46 am
The credit card company won't know you're planning to leave the country! Even if they did know, they can't stop you, unless they first sue you and get a court order saying you can't leave. But it is highly unlikely that any judge would grant such an order for a credit card debt.
Yes, they could sue you in court for the debt. They would have to serve you with the court papers before they could have a trial.
October 27th, 2010 at 10:19 am
That is acceptable, but it's easier if you go online and apply for really any type of credit card that you want. Some companies will not want to give you a card unless it is secured if you don't have any previous credit. You're best bet it to try a department store first, even though their interest rates are the highest. This way once you get a card and make a purchase, you can pay it off quickly. Keep doing this and your credit will be established. jsut don't go overboard and end up like the rest of us who are in debt up to our ears.
October 27th, 2010 at 12:32 pm
Stop applying for the cards, you will only be denied. You will have to start building your credit rating with secured credit. Make sure the banks report to the credit bureaus, otherwise it does no good.
Go to the bank you do business with, ask them if they have a secured credit card, if they do open a new account with $300 – $500 tell them you want a secured credit card against that account. Use the card for small purchases like gas or food and pay the card off entirely each month on time.
Also you can take your savings account and save until you have $1,000. Tell your banker you want to take a installment loan out against the savings account. Take the money you receive and put it in your checking account to repay the loan. Pay it off in 12 months. Lenders like to see a mixture of credit, revolving, installments, personal loans.
After a few months you can try for an unsecured card again. Retail store cards and gas cards are normally easier to get.
It takes 24 months of consistent on time payments to build a good credit rating.
October 27th, 2010 at 8:36 am
These cards are for teens/Students who want a credit cards or to build there credit.
You can get it online,
student-credit-cards1 . blogspot . com
October 27th, 2010 at 9:58 am
What kind of insane advice is this? How can you in all seriousness be promoting credit cards to people who HAVE NO JOB! DER! And we wonder why America is drowning in debt! Get Real. Why not encourage our students to save and invest instead!
October 27th, 2010 at 7:03 pm
Congrats, on your cleaning up your debt and your credit score. What you want to do is compare credit cards and the good news is there are many internet sites that will allow you to.
Check http://www.creditland.com, http://www.bankrate.com, http://www.credit.com On these sites you can look and compare the credit cards that have no annual fee and a low APR. Also if you belong to a credit union, they have excellent rates. You may also consider doing a search for LOW credit card rates in search engines. USA Today does a comprehensive list every year.
I hope this helps you out.
Good Luck
October 28th, 2010 at 5:11 am
The money in your savings account would not be available while using your debit card making normal purchases unless you have selected an overdraft protection program and the funds are not available in your checking account. I highly recommend adding this to your account, in the event that you make a purchase that is greater than the amount available in your checking account, the bank will use money from your savings account to cover the purchase. This way you don't aquire all those overdraft fees or have bounced checks (while writing checks). Pay close attention to your funds! Alot of debit cards can also be used as a credit card. Its basically the same thing in this case, where in both cases the monies will be deducted from your checking account, debit takes the funds immediately while credit will take sometimes up to 4 days to completely withdraw. The difference between your debit card, and a credit card, would be that credit cards are an open balance of money availably ready to be lended from banks, purchases using a traditional credit card also incrue interest on the amount you spend. (you have to pay back more than you spend) Debit cards are attatched to your bank account and will just deduct money from your account to pay for the things you've purchased
And though you didn't ask for it… After you've accrued a larger sum of money in your savings account, speak to your local financial director and check into special savings account that give you back more money for allowing the bank to use it, such as locked savings accounts and bonds! 
October 28th, 2010 at 11:26 am
there are a couple of ways you could start building credit, you could get a small personal loan which you might need a cosigner or the best way will be getting a credit cards, you could get a credit card and use it for your every day expenses but make sure you pay in full at the end of the month that way it will show pay in full everytime the credit card company reports to the credit beuros. At the begining you will only be approved for the lower end credit cards but once you build credit in about 6-9 months you should be able to apply for a better card with better benefits such as free miles or cash back. Check out http://www.fastcreditcardapprovals.com and go under bad or no credit section and you will find a few choices. But if you are a student apply of a student credit card these cards have no annual fees and low rates.
October 28th, 2010 at 7:22 pm
The sure-fire way of NEVER being turned down for a major credit card would be to apply for secured credit card. Basically what type of card this is, is that you give them money up front (say you ask for a $500 limit), and everytime you use that card, the money will already be in your account with that card and it will just come out. This secures to both the credit card company and to yourself that the money will always be in there, therefore there will never be any over-ages, late fees, and the the like and will guarantee you a strong credit building account. I hope that my answer has helped you.
October 28th, 2010 at 6:47 pm
i agree 1000%
October 28th, 2010 at 11:38 pm
a crock of shit………yeah right.
October 29th, 2010 at 8:41 am
Is easy being responsible, I have 2 credit cards, recently applied for another one therefor cancelled one I had, because I have established myself that I won’t have more than two credit cards. In five years I am with them, I had only paid interest in 3 cycle periods, I am always looking forward to full pay my balance, even if I stay with little money after that, is so easy, I don’t know why is so hard for people to control them self with the use of credit cards. lol.
October 29th, 2010 at 6:59 pm
Is a student credit card the same as a regular credit card, except with a lower balance “500 dollars”. Or is it strictly for paying for school.
Please help.
October 30th, 2010 at 3:30 am
A credit card can be a really good thing to have, or it can be a nightmare. Try to find one that charges no annual fee and that gives you some kind of reward…airline miles, cash back, something. Then…and listen closely…PAY IT OFF IN FULL EVERY MONTH!! You do that, no problem. you start missing payments, then you can quickly get in over your head.
They may occassionally send you the most boring looking documents you have ever seen in the mail. Read them. The credit cards can change the terms of your agreement, and these boring looking notices are the only way they tell you. If you use the card after theyhave sent out the change of terms, you have accepted the new terms.
Good luck.
October 30th, 2010 at 1:49 am
getting a student credit card is so easy, a cave man can do it, Wells Fargo bankers are always begging me to get one whenever i go there…
October 30th, 2010 at 12:51 pm
Definitely NOT Bank of America.
They recently upped peoples APR without any explanation or reason; it was all over the news. Try a company that's a little less shady. There are plenty of horror stories of what this company has done to their consumers.
October 30th, 2010 at 2:05 pm
This piece of crap video does not explain how the magnetic strip of the credit card works.
FUCK YOU ASSHOLE.
October 30th, 2010 at 5:41 pm
i have a 3,000 balance on a bank of america card if i pay off the balance and cancel the card will my credit be affected?