A balance transfer credit card is designed to make having a credit card easy and convenient to suit your personal needs. It can help you transfer your balance from your current card to another with ease if your current card is no longer giving you the flexibility and freedom that you need. It can also help you better manage credit card debt. But it can also create more problems if you fall for these five common mistakes.
Before you apply research
When it comes to applying for a balance transfer credit card or any card it is vital that you research if the card will be able to cater towards your financial needs. The right credit card can help you manage your expenses and debt effectively, but a card that is not a match for your current financial situation can land you in hot waters. When researching the details of a card check to see if it matches your creditworthiness and whether it can take care of your debt amount without adding expenses.
Keep an eye out for fees
Sometimes balance transfer cards can promise a low rate, but the fees that come with it can make the difference in being able to afford your repayments or not. Some credit card companies charge a one-time processing fee for your balance transfer also known as a balance transfer fee and can have a percentage ranging between 1% to 4% added to your debt. Some lenders also have cards that come with an annual fee when you first open your account which comes with an amount ranging from a minimum of $30 right up to $300.
Will you be able to meet repayments?
As much as the card might promise you 0% interest rate for an introductory period that you can take advantage of, will you be able to still meet the repayments once the rate reverts to the original rate? Before taking out a card it is important that you calculate if you will be able to pay the interest rate along with the monthly repayments on the card. This will help you avoid defaulting on your payments and getting into more debt.
Failing to make the transfer on time
If you are taking out the card for the sole purpose of taking advantage of the 0% introductory rate you will have to really evaluate if you will be able to meet payment every month without fail with the same amount before the window period closes. Failing to do so will result in you losing the opportunity to finally stay on top of your debt, but it could also increase your debt when the rate reverts.
Is your debt eligible for the card?
Not all debt can be covered by a balance transfer card. Therefore, it is vital that you check if the debt you wish to transfer is eligible for a specific card. You will also have to keep in mind that you will not be able to use the same issuer to help you transfer your debt from one card to another.
A balance transfer is not a magic wand that can magically make your financial problems disappear. It is important that you re-evaluate the way you spend your money and how you can improve to help ease your way out of debt and move towards financial freedom.