Updated September 4, 2014

6 Common Balance Transfer Mistakes to Avoid

Read more about Balance Transfer

We love the idea of balance transfers. They allow us to transfer higher-rate balances to one low-rate credit card, thereby allowing us to both simplify our monthly debt payments and save money.

Although balance transfer credit cards are usually a smart financial choice for many consumers, there are a number of factors to take into consideration before transferring your balance onto a new card.

Mistakes
Mistakes © opensource.com

Here are some of the most common balance transfer mistakes:

  • Not reading the fine print – Don’t just choose a balance transfer card based on the headline. Instead, carefully review the card’s fine print. Balance transfer credit cards are notorious for having a slew of terms and conditions, so it is up to you to educate yourself on them so you know you are making the right choice. While the 0% initial APR sounds great, the 25% APR that starts after three months can negate the benefits of the transfer.

  • Not considering the balance transfer fee – Although a credit card company may be offering a fantastic balance transfer offer, we must always take the balance transfer fee into consideration before we can decide if the offer is really advantageous. Balance transfer fees are common among balance transfer offers, and they usually equal between 3 and 5 percent of the transferred balance. The cost of the balance transfer fee may outweigh any benefits you would receive from the low promotional balance transfer offer, so do the math beforehand.

  • Not understanding the length of the promotional APR – Although there are many great balance transfer offers on the market, the low promotional rates may not last as long as they once did. In fact, it is now quite common for promotional rates to last only six months, when the standard was 12 months just a few months ago.

  • Not realizing if the promotional APR is for both balance transfers and purchases – We may enjoy a low promotional rate on our transferred balances, but the purchase rate may be substantially higher. It is therefore always important to consider when the promotional rate covers both balance transfers and purchases.

  • Transferring credit card balances too often – Playing the credit card game too often isn’t usually a good idea. In other words, transferring your balances onto a new card with a new promotional balance transfer rate each time the current card’s promotional rate has ended is an exhausting practice and could result in a lowered credit score from too many credit inquiries. It is best to instead choose a balance transfer card with a low promotional rate and a competitive default APR and work to pay it off in a reasonable amount of time.

Balance transfer offers can certainly help you save money and consolidate your debt. Be sure to read the fine print and avoid the mistakes outlined above, and you can be a real beneficiary of balance transfers.

More Articles in Money Tips

Balance Transfer

How to Choose a Balance Transfer Credit Card

Here are three factors to keep in mind when choosing the right balance transfer credit card for your wallet ...

Comments about 6 Common Balance Transfer Mistakes to Avoid

  • Paula @ AffordAnything.org from Georgia
    on May 31, 2011 12:40 PM said:

    Credit cards have a lot of fine print, and you're absolutely right ... taking the time to read the fine print is the best way to protect yourself.

  • Ashyia Hill
    on May 17, 2012 11:59 AM said:

    My huge mistake when I transferred my balances was not cutting up the cards or closing the accounts. Thankfully, it only took me six months to see the error of my ways and another six months to pay off what I foolishly spent.

Comments may be filtered for language. CreditDonkey makes no guarantee of comments' factual accuracy. These responses are not provided or commissioned by bank advertisers. Responses have not been reviewed, approved or otherwise endorsed by bank advertisers. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered. Visitors may report inappropriate content by clicking the Contact Us link.

Name
Email (won't be published)


Citi Diamond Preferred Card Review

With its 21 month introductory APR on balance transfers, the Citi Diamond Preferred Card is a great pick for people who have existing credit card debt.
More Articles in Money Tips








About CreditDonkey®
CreditDonkey is a credit card comparison website. We publish data-driven analysis to help you save money & make savvy financial decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the card offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.