ANSWERS: 3
  • When considering doing a balance transfer, watch for a couple of things: 1. The transfer fee - most balance transfers charge a transfer fee which is often 3% of the transfer amount or some maximum amount. If the new interest rate is much lower than your old one, this 3% is probably worth paying because of the finance charges you'll avoid with the lower interest rate. Sometimes, if you request your balance transfer over the phone, the credit card company may even waive this fee. Don't be afraid to ask, especially if the transfer amount is large. 2. The term - most of these offers expire after a few months, at which point the interest rate on any remaining balance will return to the standard rate of the card. Keep an eye out for transfer offers that last for the life of the balance. From the credit card companies' perspective, the real point of these offers is to get you to borrow from them. They figure you probably won't pay off the entire balance at the low interest rate and that they'll make money on you after the low interest rate expires. They also figure that it's a good way to get you to sign up for their card, at which point they get to share your name and personal information with all of their partner companies who will subsequently try to sell you things. So, rest assured, the credit card companies are making their money, one way or another.
  • The catch is unless you are genuinely going to pay off your balance transfer and not incur any more charges on your card, at the end of the cheap interest (2.9%) period they can wack a massive interest rate (25% upwards) on the card and you may end up in a worst postion than before. The annual fee may also be high. Having said that if you apply for the card, put all your credit balances on it and cut all your other cards up (and cancel them), and try to pay off the balance remaining before the high interest period kicks in. It might be a good way to get your finances under control. Using credit cards frequently is an extremely bad habit to get into. Try having a high interest internet account and only transfer money via the internet to your spending account/debit card. Don't have a credit card except for emergencies. Freeze it in a icecream container full of water so you have to go home an defrost it everytime you want to make a purchase. Especially when going shopping, if you only put $300 aside on your debit card for a particular item, you're far less likely to impulse buy a $3000 item on your credit card.
  • Some of them require you to make a certain amount of purchases every month, and then they apply the payment to the credit purchases instead of the balance transfers, which means you pay extra interest.

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