Credit cards can be a wonderful opportunity to do things that would take you several years to achieve, or to help out in an unexpected emergency. However, there is another side to this opportunity, a side that can turn into a true nightmare. Maybe you are already aware of the potential nightmare of swimming in credit card debt. You might believe that balance transfer credit cards are an easy solution. This article is to help guide you from possible dangers and give you the knowledge necessary to find the best balance transfer credit cards available to you. Danger One - Interest rates Interest rates can turn into a game of musical chairs (different rates) if you aren't aware of the following pitfalls. First, answer the following questions: Does the interest rate on your balance transfer credit card stay the same or does it change after a certain time period? Is it the same for new purchases as well? Most importantly, will the interest rate remain the same for the balance transfer loan amount, if it is going to increase to high interest rates in three months you may be better off with your present loan. Opportunity One - Some interest rates stay the same for term of the loan and you can consolidate higher rate interest loans and pay your balances off quicker and for significantly less interest than by staying with one or several high interest rate loans. What you need to do is to make sure the low interest rates will stay the same by researching the terms of the balance transfer credit cards available. Danger Two - Oops, I'm late on my payment! Depending on the terms of your contract, this could be catastrophic to your long term budget. Opportunity Two - Know the triggers in your contract that make the interest rates skyrocket. When you know the terms of your contract, you have control over whether or not you have to pay late fees, penalties, or very high interest rates on your balance transfer credit card in the future. Danger Three - Look for those hidden fees! There are actually credit cards that will charge you more fees than they are willing to lend you, beware . . . you don't want to pay fees, but be able to quickly pay off the principal due on your loan. Balance transfer fees, annual fees, loan fees, late fees, over-the-limit fees, miscellaneous add-on fees can make your loan skyrocket. Opportunity Three - Read the fine print! Research the different cards available to ensure that you won't have to pay for hidden fees. Some balance transfer credit cards offer free interest for the term of the loan with no transfer fee. You don't want to end up with a balance transfer credit card that turns into high interest and charges as much as a four percent fee on the loan amount you are transferring. It is easy to see why checking can save you literally hundreds of dollars for just a few minutes of investigating what is the best balance transfer credit card available. Danger Four - You pay off one credit card or loan, only to use it again! Ultimately you will be sinking into debt. Opportunity Four - Pay off that account with your transfer, then CLOSE THE ACCOUNT AND CUT UP THAT CARD! Don't even have the temptation of having the account or credit card(s) available to use. You have the ability to control your credit, not let it control your life's future opportunities. Danger Five - Be careful when you transfer your old loan(s) to your new balance transfer credit cards. You need to ensure that you give the right account number(s) for the balance transfer payment to your new balance transfer credit card company. Also keep making minimum payments until you get a statement in the mail with a zero balance or confirm by phone (make sure you record name/date/amount paid for documentation) that you are paid in full. Opportunity Five - These extra precautions and follow-up work will save you possible late and penalty fees on your old accounts. Again, you're taking charge of your credit and ensuring that you have a promising financial future. Conclusion Yes, balance transfer credit cards can be a real opportunity to help you clear up debt by consolidating your credit cards and loans and maybe even lower your total payments. However, don't forget the dangers involved with this type of credit card. Be sure to research and investigate all the possible pitfalls involved by checking the interest rate terms, any triggers that would increase your interest or cause late fees and penalties, also be sure to check for hidden fees by reading all the fine print in your contract, close out and cut-up your old credit card(s) so that you won't be tempted to run up new charges on the accounts you just paid off. Finally, be sure to follow through with your paperwork and pay the minimum amount due during the transfer of money, so you won't encounter problems with additional late fees and penaltiesnot to mention the affect it would have on your credit score. If you follow this plan, you too can secure the best transfer credit card for your specific needs and take advantage of the opportunities and stay away from the nightmare of bad credit and overwhelming bills. |
