Credit Card Quick

What You Need to Know About Balance Transfer Fees

Choosing Credit Card

Ah, the balance transfer fee. It puts a damper on an attractive balance transfer every time. If you are looking to transfer your higher-rate credit cards onto a new credit card with a great balance transfer offer, you will surely want to check out the card’s balance transfer fee before making the move to the new card.

What is a balance transfer fee?

A balance transfer fee is the fee charged by the credit card company for the luxury of transferring other balances to the new credit card. Most credit card companies charge this fee as a way to recoup some of the loss they may experience from offering an attractive balance transfer rate.

How is a balance transfer fee calculated?

There are still some credit card companies that charge a flat fee for a balance transfer, but most charge the customer according to the balance transferred. The balance transfer fee is usually a percentage of the transferred balance, and most credit cards charge between three and five percent. For example, if you transfer a $10,000 balance and your balance transfer fee is five percent, you can expect a charge of $500 to appear on your credit card upon receipt of the balance transfer.

Are balance transfer fees worth it?

The short answer is: sometimes they are and sometimes they are not. In order to fully understand whether a balance transfer offer is advantageous for your financial situation you must do the math. Consider the interest you would pay on your current debt without transferring the balance. Then, consider the cost of the balance transfer fee. If the fee is less than the interest you would pay on your higher-rate debt, then you come out ahead. If not, it is probably best to pass up the offer and continue paying on your current debt.

Are balance transfer fees negotiable?

Most credit card companies do not negotiate when it comes to balance transfer fees, although it never hurts to ask. The best thing to do instead is to compare balance transfer offers from a number of credit card companies so you can find one that best fits your budget and your financial needs.

Not Happy with Your Credit Card’s Interest Rate? Here’s What You Can Do

Introduction

A credit card that may have been a perfect match for you over the years may not seem like such a perfect match when you are informed your credit card interest rate is going to be increased. The truth is that many credit card companies are taking a number of actions to recoup losses they incurred as a result of the credit crisis and CARD Act legislation, including raising interest rates and slashing credit limits.

If you recently received an unsavory letter from your credit card company informing you of an interest rate increase, fear not; there are a few things you can do to combat this change.

• Contact the credit card company and negotiate a lower rate – One of the first things you should do when dealing with a rising interest rate is to simply contact the credit card company and negotiate a lower rate. Don’t forget to remind them that you have been a valued customer for “x” number of years and that you always pay your bill on time. This is the perfect time to play the “good customer” card with your credit card company, as many companies will appreciate a solid customer and accommodate a drop in their interest rate.
• Threaten to cancel your account – If playing the sugar-sweet card doesn’t work, simply threaten to cancel the card if the company doesn’t want to listen to your request. Although this tactic doesn’t always work, it’s always worth it if they aren’t receptive to your other negotiation tactics.
• Look for a competitive balance transfer offer – If you are unable to negotiate a lower interest rate with your credit card company, now may be a good time to begin looking elsewhere. In particular, it may be time to look at the newest balance transfer credit card offers, particularly if you currently have a balance with your credit card. Many credit card companies are offering very attractive balance transfer offers these days, so it pays to consider switching credit cards to one with a good balance transfer offer and a competitive interest rate following the promotional period.

Three Reasons why a Balance Transfer is Right for You

Introduction

Balance transfers are a great financial tool for some consumers. However, like anything else, balance transfers may not be right for you and your particular financial situation. So, how do you decide if a balance transfer is right for you?

1. You are having difficulty keeping track of your credit card payments – If you have more than a couple monthly debt obligations, such as credit cards, car loans and personal loans, a balance transfer may be a great idea because it allows you to consolidate all of your higher-interest rate loans onto one, competitive-rate credit card. So instead of juggling a number of payments each month (and risking forgetting one), transferring your balances onto one credit card can save you time and money and eliminate much of the hassle associated with monthly bill payments.
2. You are paying high interest rates and have been unsuccessful at negotiating lower rates – If you have a credit card or two that has a high interest rate, and you have been unsuccessful negotiating lower rates, it may be time to break off your relationship with your credit card company and instead choose another credit card with an attractive balance transfer offer. Many people choose balance transfers to move their credit card balances from high-rate store cards onto one credit card with a lower interest rate, thereby making the process of paying off their debt a much easier one.
3. You have a payoff game plan – The only time it makes sense to take advantage of a balance transfer offer is if you have a realistic game plan for paying off that debt once the balances are transferred. It just doesn’t make good financial sense to shop for a new credit card with a new balance transfer offer every six to 12 months when your current credit card’s promotional rate has ended. Instead, find a good credit card with a great balance transfer offer and work to pay off that debt during the card’s promotional period. Make sure your repayment plan is realistic and make a commitment to sticking to your game plan so you can enjoy life without debt.

How to Make a Balance Transfer Work for You

Introduction

A balance transfer offer from your credit card may be a great financial tool for you. However, just like any other financial tool, you need to understand how balance transfer offers work in order to make the offer work best for you and your personal financial situation.

There are two, major factors to consider when searching for a credit card balance transfer offer: the balance transfer fees and the APR. In short, never accept a balance transfer offer from your credit card unless you are fully aware of all the fees and finance charges that are attached to the offer.

What to look for when using a credit card balance transfer offer:

• Introductory APR – The first thing you will want to note is the introductory APR being offered by the credit card company. Most balance transfer offers come with low, introductory APRs, but it doesn’t stop there. It is vital that you pay close attention to the length of the introductory APR, as credit card companies vary widely when it comes to this. It is quite common to find introductory APRs for as little as six months and for as long as 18 months.
• The default APR – Once the introductory period has ended, you will begin paying interest on your transferred balances. Many credit card companies lure in customers with attractive balance transfer offers, but end up hitting them with high APRs once the introductory period has ended. If you think for one minute that you may be unable to pay off the transferred balances during the card’s introductory period then you must pay close attention to the card’s default APR.
• Balance transfer fees – Once again, the credit card company may be offering a very attractive introductory balance transfer offer, but the details of the offer are often what matter most. Enter the balance transfer fee, or the fee you must pay to transfer your balances. This fee, which is usually a percentage of your transferred balances, may be as low as three percent or as high as five percent. For example, if you transfer a $5,000 balance and your balance transfer fee is five percent, you will be charged a $250 balance transfer fee by the credit card company.

3 Easy Ways to Make your Credit Cards Work for you

Introduction

Credit cards are a great convenience and are a practical way to manage your finances, but they can be much more if you play your financial cards right. You can actually come out ahead in terms of your finances, simply by spending on your credit card. Here’s how:

1. Use a balance transfer offer to pay off higher-rate balances – If you are currently shelling out money on finance charges on any number of loans or credit cards, it may be time to transfer those higher-rate balances onto one, low-rate credit card. Luckily there are a number of great credit card offers that offer zero-percent balance transfer offers. If you plan accordingly and create a payment plan that allows you to pay off your credit card balance transfers within the promotional period, you could pay off your debts and save big on finance charges at the same time! Balance transfer offers are ideal for transferring any number of high-interest-rate debts, such as car loans, personal loans and retail credit cards, just to name a few.
2. Use your card’s promotional rate to charge a large purchase – If your credit card currently has a low, promotional rate (or a low, fixed rate), you may want to charge a large purchase, such as electronics or appliances, as to save money on finance charges. Most retail credit cards and loans offered by appliance and electronics retailers charge come with high interest rates, so you could save big just by using your credit card’s convenience checks with a low, promotional or fixed rate.
3. Charge everyday purchases and rake in the rewards – If you have a great rewards or cash back credit card and you want to see big rewards, charge everyday purchases from groceries to gas. As long as you budget accordingly as to pay off your balance in full each month (and avoid finance charges), you can begin earning big rewards, which ultimately means cash in your pocket. From discounts and cash back rewards to airline miles and free hotel stays, rewards credit cards are a big business and can spell success for credit card customers.

Should you Pay a Balance Transfer Fee?

Choosing Credit Card

There are a number of features now being offered by credit card companies, and competitive, balance transfer offers are one of them.

If you want to pay off your higher interest rate debt, you may be tempted to go after a balance transfer offer to erase this debt.  And, although there are many benefits to taking advantage of a zero-percent balance transfer offer, it is important to understand that there are fees associated with this credit card feature.

Should you or shouldn’t you?

It may seem like it doesn’t make sense to move higher-rate balances to a zero-percent balance transfer credit card if you have to pay a high transfer balance fee to do so.

A balance transfer fee is the amount charged by the credit card company for the luxury of transferring your balances onto the new card. This fee may be fixed, or it may be a percentage of the transferred balance. Most balance transfer credit cards charge three to five percent of the transferred balance. If you have a $10,000 credit card balance, for example, and the balance transfer fee is five percent, you will be charged a $500 fee.

Although a balance transfer fee is expensive, it is important to figure out what you would pay in interest charges if you didn’t transfer the balance, and then compare it with the balance transfer fee. If you come out ahead by transferring the balance, it only makes sense to make the switch to a zero-percent balance transfer credit card.

Considering all of the Advantages

There may be more advantages to transferring your balances to a balance transfer credit card than just monetary ones. For example, many consumers find that transferring all of their debt onto one credit card makes it easier to maintain their debt and pay it down. If you’re struggling to keep track of all your debt and pay on it every month, consider the practicality of transferring all of your debt onto one credit card.

Shop Around

Just like any other credit card feature, balance transfer offers and their fees vary widely from one credit card company to the next, so it is important to shop around and compare a variety of zero-percent balance transfer offers so you can decide which one is best for you.

How Savvy are you when it Comes to Handling your Credit Cards?

Choosing Credit Card

We’d all like to think we are credit card savvy, but with all the changes to the credit card sector over the last year, who can keep up? It seems like every day either the credit card companies or the government are changing the rules when it comes to credit cards usage, thereby leaving many of us in the dark about what’s right and wrong, and good and bad, about our credit cards.

Here are a few True or False statements to quiz yourself on your credit card savvy:

True or False: The more credit cards I have, the better my credit score will be.

False: Although more credit cards may mean a higher available credit and a lower debt-to-income ratio, many individuals with multiple credit cards may find themselves in trouble because of their availability to too much credit. In other words, some individuals may have the best luck using just one or two cards, while other individuals may be able to handle more credit cards. A good rule of thumb when it comes to credit cards is to never take out more than you can reasonably handle in any given month. And don’t worry about your credit score, as a flawless payment history on one credit card will always be better than a spotty payment history on multiple cards.

True or False: My credit score will remain strong as long as I pay my credit card bills on time.

False: Although a large portion of your credit score is determined by your payment history, the credit reporting bureaus also look at several other factors, including your credit history and your debt-to-income ratio. In other words, just because you pay your bills on time each month doesn’t mean you will have the highest credit score on the block. Instead, focus your efforts not only on your payments, but the amount of debt you have.

True or False: I am always better off taking advantage of a balance transfer offer.

False: Don’t assume that just because a credit card company offers you a balance transfer offer with a low, zero-percent introductory offer, it doesn’t mean it is the best financial choice for you. You must also pay close attention to other factors, including: the default interest rate once the promotional rate has ended, the balance transfer fee, and the card’s general terms and conditions.

Balance Transfer Fees: What you may not Know

Credit Card Types

You may have considered transferring your credit card balances onto one credit card with a low, promotional rate. In fact, now may be a great time to look into balance transfers, as the credit industry seems to be rebounding by leaps and bounds.

You may be receiving more credit card offers than ever, and many of those offers may come with a balance transfer offer. Although most of these balance transfer offers are quite advantageous, there may be a few things to consider before accepting a credit card offer with one of these balance transfer offers. In particular, pay close attention to balance transfer fees, as they can be tricky and often difficult to understand. Here’s what you need to watch for:

• High balance transfer rates – Balance transfer rates can vary widely from one card to the next, and some creditors charge as much as three to five percent in the form of balance transfer fees. The amount you will pay will depend on the amount you are transferring, as the balance transfer fee is a percentage of the transferred balance. It is important to remember that, most of the time, these fees are not negotiable. Sometimes individuals with excellent credit that threaten to use another card to transfer balances may have luck when it comes to negotiating the balance transfer fee rate.
• Keep in mind that there are generally no limits on balance transfer fees, so if your balances are high, expect your balance transfer fee to be high, too, which may cancel out any advantage you may get from transferring your balances to another credit card with a lower interest rate. It may be in your best interest to do the math and determine if the balance transfer fee or the higher interest rate on the other card makes more financial sense.
• Don’t expect balance transfer rates to hang around very long. In fact, many creditors have cut these introductory periods quite dramatically, from 12 months just a year ago to little more than six to nine months these days. Pay close attention to the card’s default rate once the promotional period has ended, as it could be just as high – or higher – than the interest rates on your current credit cards, thereby leaving you in a worse position than when you started.

Debt Consolidation Methods to Consider

Credit Card Debt

You may have given debt consolidation a consideration as a way to make your debts easier to manage and your monthly bills lower. If bills are piling up and you are making multiple bill payments each month, debt consolidation may be a practical answer. Debt consolidation can mean lower, monthly bills, fewer bills to pay, and a plan of action for paying back those bills. In short, debt consolidation can mean a whole lot less stress and trouble on your part when it comes to your monthly bills and debts.

There are several things to consider when looking into debt consolidation:

• Balance Transfer Credit Cards – Balance transfers are the most common ways to consolidate your debt, and are usually limited to individuals with good credit. Balance transfers usually involve moving all of your credit card debt onto another credit card with a lower interest rate. There are many creditors that offer balance transfer options so you may have quite a few choices for balance transfer if you have good credit.

There are a few things to keep in mind when using a balance transfer offer through a credit card: the interest rate; the length of the promotional rate; and the balance transfer fee. Remember that all balance transfer offers are not created equal, so look closely at the card’s terms and conditions before signing onto a balance transfer offer.

• Debt Settlement – Debt settlement may be ideal for individuals with poor credit, or for individuals who are simply drowning in credit card debt. Debt settlement, provided it’s handled by a competent company, may be a good alternative to bankruptcy. It is important to thoroughly check out the debt settlement company you choose before signing on, as there have been countless incidences of not-too-trustworthy companies.
• Debt Consolidation – Debt consolidation may include taking out personal loans that have fixed, payment terms and time frame. There are some disadvantages to this, though, as personal loans can come with higher interest rates.  There are some types of debt consolidation loans that are designed for individuals with poor credit, as well, although, like debt settlement, it is important to closely look into the company you want to work with.

Easy Steps for Transferring your Credit Card Balances

Credit Card Debt

If you’re overwhelmed by too many credit cards and sick and tired of paying high interest rates on some of those cards, it may be time to considering transferring those higher-rate credit card balances to just one card with a competitive, fixed rate. And luckily it’s pretty easy to do. Here’s how:

• Check out the offers you receive in the mail to see which one is best for you. Take into consideration the introductory interest rate, the interest rate once the introductory period has ended and the length of the introductory period. Don’t assume all balance transfer offers are the same. They differ quite a bit from card to card, so take the time to compare offers.
• Don’t just read what the creditor wants you to read. Instead, read the fine print. The credit card’s terms and conditions should be read and understood before you accept a credit card offer, so take the time to read and reread the fine print before taking the next balance transfer offer that comes your way.
• Don’t always assume the lower introductory rate is the best value. Instead, take all factors into consideration, including the length of the introductory rate, the rate once the intro rate has ended and the balance transfer fee. You may need to pull out the calculator to determine how much money you will save, what you will pay in balance transfer fees based on the amount transferred, and any other related fees.
• Once you have decided upon the credit card to complete your balance transfer, save yourself time by applying online. Don’t forget to gather your other credit card accounts that you want to transfer so you can be prepared to transfer the balances once you have been approved. Make sure you have all of the information necessary to handle these transfers, including the account numbers and your current balances.
• Some credit card balance transfers can take a couple weeks to happen, so if you have a credit card payment due soon, don’t neglect it, as you could risk late payment fees if your balance transfer doesn’t happen before the due date.