• Facebook Facebook
    • Twitter Twitter
    • RSS Feed RSS Feed
  • Home
  • Blog
  • Credit Card News
  • Questions

Home > Credit Card Blog

Seven Things You Should Know About Balance Transfer Credit Cards

July 5, 2010 - 8:49 pm

Balance transfer credit cards are a great way to reduce your credit card debt, but only when you transfer balances to a credit card with a lower interest rate. If you’re looking at a sweet balance transfer deal, get some facts about balance transfer credit cards before you apply for the credit card. Balance transfer cards can be tricky so it’s best to know the facts beforehand.

1. Introductory rates must last at least six months. A credit card law that went into effect in 2009 specifies that any promotional rate must last at least six months. That means you get at least six months to take advantage of your lower rate before your interest rate increases.

2. You can lose your promo rate if you’re late. The law does allow your credit card issuer to take away your promotional rate if you’re more than 60 days late on your credit card balance. Not only will you lose the benefit of your balance transfer, you’ll also pay a late fee and suffer a loss to your credit score.

3. Transferring a balance could hurt your credit score. Since 30% of your credit score is based on your credit card balances, piling too many balances on one credit card can hurt your credit. Anytime your credit card balance rises above 30% of the credit limit (that’s $300 on a card with a $1,000 limit), your credit score takes a hit. Transfer to credit cards with a high limit to lessen the effect to your credit.

4. You’ll pay a fee for transferring a balance. Fee-free balance transfer credit cards are hard to find. And those without a transfer fee usually have a higher introductory interest rate, if they have one at all. The balance transfer fee is most often 3% of the balance transferred, but usually ranges from 2% to 5%. There may be a minimum balance transfer fee, like $10. The balance transfer fee increases the cost of your transfer, and could negate your interest rate savings if the fee is too high.

5. The transfer may not be instant. Though the transfer process happens electronically, it could take two or three billing cycles for your balance transfer to be complete. In the meantime, you must make sure you continue to make payments on the old credit card. Otherwise, you’ll be charged a late fee and suffer a hit to your credit score.

6. You’ll need excellent credit to qualify. These days, credit card issuers are very choosy about who they give balance transfer credit cards to. If you don’t have an excellent credit score – something in the 700s – you probably won’t get approved for a balance transfer credit card with a good interest rate offer. If you don’t have a great credit score, save yourself the extra credit report inquiries and improve your credit score before applying.

7. Minimum payments may not reduce your balance transfer balance. The law says that only payments above the minimum must be applied to the lowest rate balances. Otherwise, your credit card issuer chooses how to distribute your payment. When you have multiple interest rate balances, your minimum payment most often goes toward purchases first. You can avoid this by transferring to a credit card with no other balances and avoid making purchases on your balance transfer credit card.

Similar Posts

  • Should You Transfer a Balance to a New Credit Card?
  • 7 Things Credit Card Issuers Can’t Do
  • 5 Times It’s Ok to Make Minimum Payments
  • 7 Things You Should Know About Credit Cards
  • Be Careful With Costs of Balance Transfer Cards
  • Recent Posts

    • Why Stay-at-home Moms Created a Petition against the 2009 Card Act
    • Credit Card Rates Stand at 4 Year High Mark
    • Average Credit Card Rates in December 2011
    • Obama Proposes Initiative for Making Credit Terms Easier to Understand
    • Aggressive Cash Back Credit Card Deals for the 2011 Holiday Season
  • Categories

    • Credit Card Blog
    • Credit Card News
    • Featured Articles
    • Spotlight

Home | About | Credit Cards | News | Blog | Questions


Privacy Policy | Terms & Conditions


Copyright © 2011 ApplyForACreditCard.com. All rights reserved.

By using our service and providing your personal contact information, you agree that ApplyforaCreditCard.com, any of its affiliates and any company you are matched with may contact you by any method of communication, including by telephone even if you are on a federal or state Do Not Call registry. This site is a free matching service intended to provide a variety of options and information, and is not responsible for any service/information provided by any third party provider. ApplyforaCreditCard.com is a marketing and advertising agency only. It does not supply the service provided for therein, rather it provides a matching service. Upon your submission of the information requested on our website, we re-direct you to one or more of our participating service providers. You are under no obligation to pursue business with any of the participating service providers in our network. We encourage you to review each service carefully before electing to do business with them. Further, you should review their privacy policy and terms on the their page and contact them directly regarding their organizations' policies.


The content, including without limitation any viewpoint or opinion, contained in any article or video posted on this website is for informational purposes only and does not necessarily reflect the opinion or viewpoint of ApplyForACreditCard.com. Any third party contributor to any such article or video has been compensated by ApplyForACreditCard.com for such contribution. It is advised that you conduct your own investigation as to the accuracy of any information contained herein.