“Zero percent interest and no balance transfer fees!” It’s an offer you see a lot, and a lot of the time the claim is completely false. Sure, you might get anywhere from zero to five percent interest, but only for a limited time. Before you jump into one of these deals, make sure you ask the right questions:
- How long will the introductory rates last? If you find out it’s for only three months, and you can’t possibly pay off your balance in that amount of time, look for another card. Or contact your present creditor and ask for lower rates. With all the competition out there for customers, credit card companies want to keep the ones they have. And if your credit score is at least 700 or above, you are entitled to a very low rate. For a $15 charge you can find out your score at Myfico.
- What exactly is the balance transfer fee? Make sure you get it in writing. Most companies charge a three percent balance transfer fee. At that rate, it may not be worth changing cards at all.
- Is there an annual fee? Find out exactly what it is and which month you’ll be charged. If you are close to your credit limit and all of a sudden you are charged a fee you weren’t expecting, it could put you over your credit limit. Some card issuers charge as much as $39 for over-the-limit penalties.
- What are the late fees and how long is the grace period? If you pay your bills online and you set it up to pay out on the due date, you might be charged a late fee if that payment takes a day or two to process.
- Don’t apply for too many credit cards at once. It could hurt your credit rating. Lenders look at an application as an “inquiry,” meaning an opportunity for credit that you will actually use. Only apply for one card at a time. And if you get turned down, you have the right to see a copy of your credit report from the agency that rejected you.
Instead of transferring the balance on your credit card, consider an unsecured low-interest bank loan. And while you’re paying off your debt, come up with a plan to cut back on spending.