Wednesday, October 31, 2012, AM | 2 Comments
You may have racked up quite a large debt on your credit card and you may be looking to transfer your balance to another card to get a lower interest rate and thus manage your credit card debt better.
A credit card balance transfer means when you as a credit card holder open a new credit card with the least interest rate possible – 0% is quite frequently advertised – to pay off the old one.
What happens when the balance is transferred…
All your previous credit card debt and interest is owed to the new company, which often provides a grace period where a smaller amount of interest is charged on the transferred balance. You may be able to find as little as 0% interest with the new company.
Quite often this so-called introductory rate lasts for around six months to a year after the balance transfer takes place.
Usually there is no fee charged for the transfer of the balance and anyone with a valid social security number and mailing address can take advantage of the option.
Be aware of the following points for balance transfer…
Depending on what your credit score is, watch out for the following:
The new credit card firm may decline to process your request for Balance Transfer if you don’t meet certain criteria:
If you do not have enough available credit at the time of the transaction
If your account is closed
If your payment is past due
If you have filed for bankruptcy
Your available credit will change based upon your account activity. They may decrease your credit limit without prior notice.
If your credit limit decreases, it will impact your ability to use any checks they may have sent you.
You should try your best to avoid using those checks. Your need for balance transfer may have started with checks they sent you in the first place.
If you transfer a balance with the offer, you may not be able to avoid interest on purchases, even if your promotional balance has a 0% APR.
You can avoid interest on purchases if you pay your account balance, including any balances you transfer with this offer, in full by the due date each month.
Be sure you do not transfer any disputed purchase or other charge amount, as you may lose your dispute rights.
The new credit card issuer may apply the portion of your payments up to your minimum payment due to lower APR balances first, including your transferred balances.
Generally, payments above your minimum payment due will be applied to your highest rate balance first.
Transferred balance amounts do not earn any miles, rebates, points or reward benefits associated with your card, unless otherwise indicated.
In a Nutshell
The credit card firm might claim that to protect your account, it might follow one or all of the above to refuse offer for the balance transfer. It might also suspect fraudulent activity in your account by other folks.
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