How to Avoid A Major 0% Balance Transfer Credit Card Mistake
Warning: Before you apply for a 0% balance transfer credit card offer, you need to read and heed the following words of advice. If you want to know how the actual zero percent balance transfer process works, please read this guide to making balance transfers as well – in tandem with the article below. Both will help better educate you regarding this powerful but rule-laden process.
Using A Balance Transfer Card As A Financial Safety Net
While some debt reduction pundits discourage the use of balance transfer credit cards, I respectfully disagree with their blanket rejection of this invaluable financial tool. While I concur that the use of credit cards is not for everyone and misuse can lead to out of control credit card debt, I think the responsible use of credit should be viewed as an integral aspect of debt reduction and sound financial planning.
I myself have relied and depended on 0% balance transfer offers in the past to get through periods of financial difficulty. There were several times in my life when I incurred major unexpected expenses that I was unable to financially cover on my own – examples such as large unanticipated tax bills and emergency car repair charges. Other times I simply did not have the cash flow available to pay off my monthly bills despite having a stable, entry level job at the time. Rather than resorting to something reckless like stooping for a high interest payday loan, I applied for credit cards that offered introductory 0% APR interest rates on 12 month balance transfers. With the infusion of instant money on 0% balance transfer credit, I was able to weather the financial storm, rather than relying on the charity of family or friends. Balance transfers help you bail yourself out of difficult times but still maintain that key financial independence, and doing so in a responsible and planned out way.
Using A Balance Transfer Card To Make Money and Profit
While I’ve used 0% balance transfer offers for emergency parachute purposes, I’ve also used them to earn free interest money. By depositing the 0% balance transfer funds into a high yield savings account, I was able to make money from what was essentially zero interest loans. Whether your need or want for credit depends on a single card or multiple card offers, the risks and pitfalls with balance transfers remain the same. Balance transfer cards are certainly very lucrative and powerful financial tools, but they have rules that must be followed and adhered to.
Here are some of the key mistakes and pitfalls to avoid, that all balance transfer enthusiasts must pay attention to. These are all key balance transfer components that have a high tendency to trip people up. Proper knowledge and credit education can help cardholders avoid turning their balance transfer lifelines into balance transfer disasters.
1) Some 0% Balance Transfer Offers Have Balance Transfer Fees – When you apply for a balance transfer offer, there are two important components you must find out – the balance transfer APR interest rate and the balance transfer fee, if any. The interest rate is the percentage rate that you will need to pay the card company if you carry an unpaid credit balance from month to month. With new introductory 0% balance transfer offers, the interest rate should be zero.
The balance transfer fee is the one time cost of executing the balance transfer transaction. The usual fee percentage is 3%, but many cards set maximum fee limits of $50-$75 for the one time charge. However there are some special balance transfer cards that offer 0% interest rates with no balance transfer fees. The terms and conditions of no balance transfer fee cards usually expressly indicate that pursuant to the 0% balance transfer offer, the transfer fee is waived. Those types of offers are perfect for consumers looking to transfer high interest debt to a zero percent credit card and for those looking to weather a financial emergency, because it’s possible to avoid all upfront or subsequent fees completely. On the other hand, those looking to profit or make money from balance transfer arbitrage usually don’t mind the balance transfer fees as much, because their goal is to maximize their total 0% credit line.
If you don’t want to go through the trouble of examining the detailed fine print of all available credit card offers, I’ve done most of the work for you:
- List of All 0% Balance Transfer Cards – Includes a complete list of all 6-12 month offers with everything from 0% to 3% balance transfer fees.
- List of 0% No Balance Transfer Fee Cards – Only balance transfer cards with no fees are listed. The length of each introductory 0% APR period varies.
2) Keep Track of the Balance Transfer Duration and Expiration Date – Along with the interest rate and balance transfer fee, savvy consumers need to know and remember the length of the 0% introductory period. The length of most promotional offers is usually 6-12 months although the period varies based on individual card terms. The introductory balance transfer clock usually starts when the first balance transfer request is made. So long as there are no credit card term violations such as a late monthly payment, the 0% interest rate remains in effect for the duration of the promotional period. Once the transfer has been made, I highly recommend calling or emailing your card issuer to request the exact expiration date of the balance transfer. I suggest that you circle the target date on your calendar. I personally use my Yahoo email calendar function to set online reminders for myself a month and a week before balance transfer expiration.
3) Don’t Make A Cash Advance Instead Of A Balance Transfer By Mistake – Do not make the very critical and significant mistake of requesting a cash advance rather than a balance transfer. While they may seemingly operate in similar ways, they are not the same. A cash advance is initiated when you cash one of those credit card convenience checks that the card issuer occasionally sends you, or when you use your credit card at an ATM machine to access your credit limit. Always avoid cash advances if you can because unlike 0% balance transfer offers, a cash advance usually has very high fees and high interest rates. If you make a cash advance, it effectively destroys the benefit of your introductory 0% balance transfer offer. Always make sure and verify that it is indeed a balance transfer being made, and not a cash advance.
It should be noted that certain credit card issuers like Citibank do issue balance transfer checks. Rather than requiring from you a credit card balance to transfer, Citibank will upon request, simply send you a balance transfer check for the entire balance transfer amount you request. The check can be deposited into any bank account you wish like any ordinary check. While it may resemble a cash advance convenience check, it is labeled and categorized differently.
3) Always Make Sure You Pay Your Monthly Credit Card Bill On Time – This point is absolutely critical. Should you accidentally or intentionally default or fail to pay your monthly credit card bill on time, your introductory zero interest rate will reset at much higher rates. Normal credit card interest rates vary, but they usually average around 10-20% APR give or take. The rate might not seem like a lot but when you are talking about balance transfers, imagine defaulting on a $10,000 balance transfer offer and suddenly having to pay back the entire amount immediately or face significant interest fees. Thus, you want to always make sure you pay off your minimum balance on time every month. I cannot overemphasize enough – Do not fail to pay or make a single late minimum payment. In the event you are late, there is a small chance the card issuer may be generous enough to restore your introductory 0% balance transfer rate as a courtesy gesture. It worked for me at least once in the past, but then again, I had a blemish free payment history prior to that.
I highly recommend setting up automatic debit payments to have the minimum balance instantly withdrawn from your linked bank account when the monthly balance comes due. Setting upon account alerts is also a smart idea. You should always review your monthly statement regularly to check for any unintended or unknown charges, just in case.
As an additional reminder, if you are transferring a balance from another credit card, make sure the old card’s balance has been completely paid off and the bill has been set to zero before you stop paying it. Sometimes it takes a week or more for the balance transfer request to be made effective.
4) The 0% Balance Transfer Offer Does Not Extend To Purchases – While the credit card balance you transfer to the 0% card will carry the introductory zero fee rate, subsequent purchases using the credit card will not enjoy the same 0%, but rather will be applied towards the card’s ordinary interest rate for purchases. If you are using the card primarily as a balance transfer card, I recommend that you remove it from your wallet and place it at home so that you don’t accidentally use it to swipe a purchase. I always attach a “do not use” Post-It warning on my active balance transfer cards at home so I don’t use it by mistake. If you are interested in credit cards that offer 0% APR interest rates for both balance transfers and credit purchases, you will need to apply for those that have that particular promotion.
- Here is a list of 0% purchase and balance transfer credit card offers that I’ve compiled.
5) Payments Are Applied To Lower Interest Charges First – Almost all balance transfer fine print will specifically indicate that payments made by cardholders towards their card balance will be applied to lower interest charges first. This means that when you make a payment, it goes toward the 0% portion of your credit card balance first, not the higher-rate portion for purchases. This is crucial because it is completely counter-intuitive and opposite of what cardholders would logically do.
Let’s say you transferred a balance of $5,000, then made a purchase for $100. You will now be paying the regular credit card interest of 15% on that $100 item until the $5,000 balance is completely paid off. This is a balance transfer killer that you absolutely want to avoid since you will now be compelled to pay off the entire balance in full immediately or face recurring interest charges. If you want to make 0% interest purchases, then seek a credit card that offers 0% for both purchases and balance transfers.
6) Don’t Rush To Pay Off Your 0% Balance – You should try to take the most advantage of the interest free grace period offered by the balance transfer offer by putting the extra cash in a high yield savings account. At the end of the 0% grace period, you should then withdraw the money from the bank account and use the accumulated money, plus the interest it has earned, to repay your credit card bill. After paying off the balance, there should be leftover interest money – profit from taking advantage of the 0% balance transfer offer.
7) Don’t Cancel Your Balance Transfer Cards After The 0% Introductory Grace Period Is Over – While this one is merely advisory and not a crucial mistake like the ones above, I think there are a few solid reasons why you shouldn’t cancel your card after the balance transfer period is over. You should keep the card active because sometimes the card issuer will try to attract you with another complimentary 0% no balance transfer fee offer. Another reason is that closing your card account has the noticeable effect of dropping your FICO credit score because it lowers your total credit line available, and increases your credit utilization ratio. If you insist on canceling the card, at the very least you should roll the credit limit onto another card by the same credit issuer. That way, while you reduce the number of cards, you still maintain the same credit utilization.
Follow The Above Rules, And You Will Succeed With Balance Transfers
Another thing you might be wondering is – if these balance transfer deals are truly free and cost nothing, how do credit card companies make money from these type of offers? The answer lies in the fact that statistically, some balance transfer cardholders will inevitably fail to follow the card offer terms and wind up making one of the key blunders described above. Credit card issuers know that some consumers won’t pay attention to the details and will end up paying penalty fees and interest.
Remember to play by the credit card rules to fully profit and benefit from lucrative 0% balance transfer offers. Using a balance transfer is not really meant to be some clever trick or credit card hack – so long as you pay attention to details and educate yourself thoroughly, you too can learn to utilize it as one of your financial planning tools, just like me.
March 16th, 2008 at 6:12 pm
Great list, Raymond. Balance transfer cards definitely have enough rules and exceptions that I’d be quite wary before trying one.
April 23rd, 2008 at 1:50 pm
I am just wondering – can I transfer a balance to 0% card for 12 months and
after say 11 months, apply for anther 0% balance card and transfer what Ihave
not paid off from the first one and so on and so on until the entire debit is paid with 0 interest? At one time, I had a 0% card for life with no required purchases.
Boy, did they lose out – I kept paying it until it was paid off and paid no interest whatsoever. Any of those out there any more?
April 23rd, 2008 at 1:58 pm
Loretta,
I am not aware of any current 0% balance transfer deals for life, although that would be quite an amazing deal. Most are capped at 12 months these days. The balance for life cards generally have an interest rate applied, although they are quite low.
But yes, once your introductory 12 month promo period ends, you can shift the balance over to another balance transfer card, presuming of course that you can get approved for another one. I’ve done that once before…ending up with a 24 month balance transfer. The key is to make your payments on time and otherwise maintain a respectable credit score.
May 4th, 2008 at 3:31 pm
I have a two questions. I have a sizable amount of debt, but am on target to be debt free within 3 years. I have two credit cards that I’ve had for over a decade. I have seen very nice balance transfer teaser offers for new accounts for one card that I already have. How likely is a credit card company willing to provide a balance transfer option at such a decent rate for an existing customer, or do we consumers need to look externally for these offers? I would prefer to transfer to the card that I’ve had for 10 years and has treated me like a good customer, from the card company that I absolutely loathe. If I am able to get a decent deal from my existing company and do a balance transfer, this would max out my existing card, yet leave a large available credit on my other card. Would this effect my credit score?
Thank you in advance for your advice
May 7th, 2008 at 12:11 am
Jessica,
Sometimes credit card companies will issue promotional balance transfer offers for existing customers in an effort to retain them as customers once 0% balance transfer periods end. However, the credit card issuers have recently been focusing their marketing efforts towards capturing more new customers than retaining existing ones. Thus, I think the likelihood of getting a nice 0% credit card offer from your existing card issuer is probably going to be slim. Your chances are much higher if you apply as a new customer unfortunately. Of course, it doesn’t hurt to ask at least.
Transferring your balances around may affect your FICO credit score if it results in changes in your total aggregate credit usage ratio (the percentage of credit being used over the total amount of credit available to you).
May 7th, 2008 at 2:41 pm
Raymond,
Question #1: I don’t understand what you mean by the percentage of credit being used over the total amount of credit available to you. Do you mean that the FICO score will go down if your percentage of debt keeps going higher towards the maximum of credit available?
Question #2: I have called a couple of credit card companies and told them to decrease my credit available. Will this affect my FICO negatively? I did this, for once I applied for a loan and they would not give it to me for they said my credit limits were too high even though most of them had a 0 balance. They said I had too much credit available for my income.
Thanks!
Loretta
June 10th, 2008 at 8:04 pm
Loretta,
1. A large component of your FICO credit score is your total credit usage ratio expressed as a percentage of the amount of total credit usage over the total amount of credit available to you. Yes, your FICO will dip down if the percentage of debt gets close to the maximum available.
2. In general, yes, by decreasing your credit limits, you may drop your FICO credit score a bit. To get around high existing credit limits by the same credit card issuer, you can sometimes ask them to drop your credit limits on your old cards but shift the credit limits over to the newly applied for balance transfer credit card. I’ve done this many times with Citibank cards for example. They usually don’t mind you opening up multiple cards, but may ask you to shift your credit limits around accordingly.
July 24th, 2008 at 6:46 pm
If I have a small balance on the card I am doing a balance transfer onto and I pay that current amount the same day I do the transfer,will any part of that balance still stay lingering on my card til I pay the transfer balance?No part of that should be considered a new purchase should it?
July 24th, 2008 at 7:59 pm
Victor,
If I understand your question correctly, you are asking me what would happen with a pre-existing balance on a 0% balance transfer credit card that assumes a new promotional 0% balance, transferred from another high interest card. The concern I have with that is the fact that if the new 0% balance is added to the promo card before you first adequately pay off the existing balance on the card, you won’t be able to direct any new payments towards getting rid of that existing balance until the new 0% card balance is paid off first. This is because payments are generally applied to lower interest balances (0% APR) before being applied to higher interest balances.
If you transferred the 0% balance offer onto the card on the same day as you supposedly paid it off, there may be a timing issue. I personally would have waited a few days to ensure the card was completely paid off before starting the 0% transfer.
July 24th, 2008 at 9:39 pm
Thank you for the answer.Yes that is definitaley my concern.I payed the current balance off the same day assuming that it takes 3 to 5 days for a balance transfer to process and the payment posted the same day.What can I do if a small balance is still left there at a higher rate?Is there anything I can do?My new balance transfer is for 30,000.Please help me if you have any advise.If I was misinformed is there any recourse?
July 24th, 2008 at 9:47 pm
Victor,
If you were somehow mislead or misinformed by your customer service rep that the payment would be otherwise immediate, you may have a case. Other than that, you can try to speak to the credit card issuer to discuss your timing problem. Tell them that you paid off the card on the same day and were led to believe it would be applied prior to the incoming 0% balance transfer.
Some card issuers like Citibank tend to be more flexible and will give you the benefit of the doubt. I missed a minimum balance transfer payment for a 0% balance transfer card one time by a few days due to paperwork problems and my card issuer was gracious enough to let it slide rather than reset the entire balance at an insanely high APR interest rate.
Try discussing with your credit card issuer – that’s my advice. I really hope it works out!
July 30th, 2008 at 8:24 pm
I have a question about the credit usage ratio affecting your credit score? Are you saying that once you get into credit card arbitrage, you should continue to leave those cards open even after paying off the balance transfer amount? Thanks. Great site!
July 30th, 2008 at 9:10 pm
Kevin,
Absolutely. There is rarely any reason to cancel those cards even after you use up the 0% balance transfer offers and pay back the balance in full. If you simply have credit card spending issues and feel having so many cards is too tempting, my suggestion is to call the company and ask them to lower your credit limit, rather than canceling them altogether.
But ideally, you’re better off keeping those cards active since it helps to increase the total amount of credit limit available to you. I personally own a great number of credit cards – more than 10. Most are now spent balance transfer cards and retain their credit limits. As a result of my low usage ratio enabled by having a high total credit limit that is unused – my FICO credit score is almost 800 at this point.
August 23rd, 2008 at 2:04 pm
If I had used a cash advance on one of my old credit cards and had an low interest rate transfer offer on new credit card will the transfer offer on new card apply to total balance on old card? Or will the it be broken down, that is low interest rate on regular charges transfered and higher on cash advance? Guess what I am looking to do is to use a low interest transfer offer to mitigate high interest on cash advance. Thanks in advance
October 1st, 2008 at 5:21 pm
Hi!
I have about $4,000 in credit card debt ($966 on a card that I haven’t used in a long time, I’m just paying it down, and $3,123 on another card). Anyway, I’m a student in college (I used the cards to help pay tuition), and now I barely have enough for my minimum monthly payments and all my other bills, too. Basically I’m wondering if I transfer the balance, will it just minimize my monthly payments or will it allow me to pay off the card faster, too? And is it harder to get approved for a 0% transfer balance after the first one, in case I want to transfer from one to another to another until it’s paid off?
Thank you SO MUCH!
A broke college student
October 8th, 2008 at 3:26 pm
Britches,
0% balance transfer credit cards, when used properly within the framework of the transfer rules most definitely can help you pay off your credit card debt, and indeed help you pay off your high interest card faster. Because you don’t have to pay interest during the duration of the 0% APR period, all of your card payments go towards the principal. Plus there is significantly less stress and desperate urgency when you don’t have to worry about compound interest hanging over your head.
In my opinion, I don’t think it’s necessarily any more difficult to qualify for a new 0% transfer card after the first one, presuming of course that your FICO credit score remains intact. While FICO scores tend to dip shortly after you acquire a large balance transfer on your card, if you are only shifting the balance from one high interest card to the 0% balance transfer card, the effect on your FICO will probably be minimal.
October 20th, 2008 at 2:32 pm
Using A Balance Transfer Card To Make Money and Profit
Don’t understand how you get a balance transfer into a bank account? Usually a balance transfer form one credit card goes diretcly to the new credit card. Please explaion
John
October 21st, 2008 at 2:22 pm
My objective is to balance transfer most of my home equity loan to a zero interest card and pay on it, transfering again if need be. The problem is that the bank that has my home equity does not accept balance transfers as a home equity payment. Ponderous.
I am looking at doing a Cash Advance from Discover, Capital One, BankOfAmerica or AMEX to my account and then balance transfering it out immediatly. At the same time request a balance transfter from one of the zero guys. I have a chase offer for 15 months and no fees just waiting for my call. I would rather not incur the fees that go with the cash advance.
Or can I somehow do a balance transfer to myself and then use the cash to pay off some of the home equity loan? I am unsure of what questions they will ask.
Do I just need a business name for the balance transfer?
PS, only the capital one has a balance on it of about $3k. As soon as I can figure a way to transfer all of the funds around, I will close all but my longest standing card and pound down the balance.
What do you think?
November 18th, 2008 at 1:50 pm
Is there any way to tap in to my credit limit at the credit cards current rate for purchases, but get cash to pay bills or pay off another credit card at high rate. No one will give me a ballance transfer (but Chase, but I have chase and you cannot pay off one chase card with another chase card!). I have 35k limit, but they have 3% fee – no maximum
John
November 20th, 2008 at 12:47 pm
I am inquiring about balance transfers… I’ve read almost everything that I need to know about them (the intro periods, the balance transfer fees, the conditions, etc.) My scenario is this.
Card One- $2700 credit limit; $2500 balance; 11% interest rate
Card Two- Initially $7500 credit limit (limit was cut to $5400 w/o my knowledge last week); $5300 balance; 22% interest rate (I’ve been less than a week late twice in the last 6 months)… this card has also increased my monthly payments by double in the last 2 months.
* I also have an approved credit line of $1500 with my credit union with a 9% interest rate that I have not tapped into.
I would like to transfer the $5000 balance to another card, but I am afraid that I will apply and be denied. I believe that my credit score is about 650 (which is disheartening because it was about 740 this time last year). I don’t want to hurt my credit score any more by applying and being denied, but I really have minimal options. I have to get out from the high interest rate card, but I also need an “emergency fund” card for unexpected expenses… and now I have ZERO available credit after they cut my limit.
Would I even qualify for a balance transfer card? Would the credit limit be high enough to tackle the $5000 that I would like to transfer? I, like many other middle class Americans right now, feel like I’m drowning and it all happened so fast. If ANYONE has suggestions about how to go about tackling my credit card problems please reply.
January 1st, 2009 at 4:53 pm
I am wondering whether or not it is worth it to payoff my auto loan balance of $19,000 using a 0% credit card offer. I understand that a 3% transaction fee ($570) would apply and that it would be required of me to transfer the balance to another 0% offer for the next 2 years. The advantage is that, by increasing my monthly payment to $550, I could payoff my loan in just under 3 years vs. 4 and save myself $4,000 worth of interest in the process. My current auto loan is at 6.6% with 46 months remaining. FYI… I have an available credit line/limit of approximately $83,000. [ If I used the 19K, I would have an additional $64,000 of credit available] I only mention this, as this may have an effect on my FICO score. The disadvantage I see is that I need to ensure that I have monthly payments automatically set up to the credit card, to prevent missing any payment.
Question:
Will this adversely affect my FICO score AND/OR Create a problem if I needed to rent or purchase a home?
January 2nd, 2009 at 1:29 am
I don’t think this would adversely affect your FICO score because you would only be using about 25% of your credit limit. I just read somewhere that said how much you can use before it affects your score. Does anyone know? I want to transfer a balance for a $5,000 lawn mower to my credit card that has a $5,000 limit. I am sure this will affect my score. Should I increase my credit limit or would doing so lower my score? Either way, I believe my score would be lowered. Sorry, I answered a question with a question. Can someone help both of us out?
January 7th, 2009 at 1:43 am
I have 3 or 4 credit card offerd with 0% for balance transfers and any purches for the next 15 months and I balance transferred to my debit card / bank account.
Lets say 5000.00 each card. That’s 20,000 dollars in my bank. If I was to withdrawl that money from my bank and then filed bankruptsy what would be the comsequenses?
February 16th, 2009 at 10:48 am
I have an existing Citibank card that i’ve been using for years, that recently offered me 0% interest on a balance transfer. I quickly moved my credit card debt from one account to this one. I then have read about NOT spending on balance transfer cards. I already had a balance of 98.74 on the Citibank account when I added my balance transfer to it. Since I have not charged anything to this account AFTER the transfer, are these purchases exempt from the high interest rates? Basically, will my next payment go to pay off my previous purchases first, then apply to my balance transfer? I’m fearful that I should have paid what little balance I had on that card before transfering my balance. Any input would be appreciated!
April 8th, 2009 at 1:58 am
Shelbs,
How did you proceed? Did you receive any helpful advice? I’d love to know how things worked out for you because I am in somewhat of a similar situation as you described in your post on 11/20/08. Hope things went well for you.
April 14th, 2009 at 7:34 pm
I have an offer of %4.00 for the life of the loan. My debt is 10k (had to buy a new roof, couldn’t put it off and didn’t have the cash on hand). I was reading the fine print on the card offering the deal (US Bank). It stated I must make one purchase per year or there would be an annual fee to use the card. And, then of course – I was concerned about Rule #5 above. So, if once a year I spend ten bucks on the card to avoid the annual rate (I don’t know how much it is – I will call and talk with them about this soon), I have the potential of this ONE ten dollar purchase costing me a TON of money in interest (purchase rate 13%). Is that correct? Rule number 5 confuses the heck out of me. Thanks.
April 15th, 2009 at 2:20 am
Dead Welsh,
I’m presuming your US Bank balance transfer credit card does not set a minimum purchase amount for the requirement that you must make at least one purchase per year. If that’s the case, then I’d advise you use the card on the cheapest product you can find….something like a 5 cent candy if that’s possible. The lower the purchase amount, the less likely the compound interest effect of the APR interest will really harm you.
However, even if you carried a sizable balance at 0% APR and added a few purchases of $10 at the normal credit card interest rate, the $10 alone isn’t going to compound all that quickly unless you drag it out for years and years. It’ll probably take more than 15 years for that original $10 to add up with interest to exceed more than $100.
May 18th, 2009 at 4:16 pm
I have approximately 15,500 in total credit card debt on two cards with 14,500 on one card with about half of that at 0% until November. I have struggled with this for a long time and really want to develop a plan to pay this off within 2-3 years. I am confident that it can happen, but I need some advice on how to proceed. Is it feasible to split the 14,500 between two cards-perhaps one being an existing card? Also, would it be wiser for me to seek out a low interest rate for the life of the loan because I know that I will not be able to pay this off in a year? I’m concerned that I will not be able to transfer the entire balance onto another card. I assume it is not possible to request the transfer be of the dollar amount not at 0%? Any advice would be appreciated.
May 18th, 2009 at 7:09 pm
AKB,
It would help if I knew what your FICO credit score is. A high FICO score ensures a much higher likelihood your 0% balance transfer credit card applications will be approved. A high credit score also ensures that the hard credit checks associated with repeated credit card applications will not substantially impact your credit score health.
But in general, I would recommend sticking with 0% APR credit cards if possible. Also, keep your eyes peeled for those Discover card lifetime balance transfer offers floating around. They offer 0% for the life of the transfer, except there is a catch…you have to make a few purchase transactions every month – transactions that incur interest at the higher purchase rate.
May 19th, 2009 at 11:44 am
Thank you for the information. My FICO score is 765, so am I to assume that it will be easier for me to obtain the 0%? Also, you do suggest sticking with the 0% even though I will not be able to pay off the balance in 6 months to a year? Of course I am worried about my score going down because of repeated requests. I do have an existing card which is offering me 0% until November, or 2.99% until 8/2010. There is not enough credit on that card to put the whole balance, but a good portion of it. Of course there is a 3% transaction fee…Trying to decide, but it’s so confusing sometimes. I will keep my eyes open for the Discover offer.
May 29th, 2009 at 1:12 pm
I don’t understand what you mean by putting the extra cash in a savings account. What extra cash are you talking about? Are you talking about the interest that you have been charged on the original card before the balance transfer? Are you talking about taking out some cash advances off the original card and then transferring to the 0% interest card? Could you please give me some kind of scenario so I can see what you’re saying and what I need to do in order to benefit from the same situation? Thanks.
June 1st, 2009 at 11:27 pm
I’m hoping someone could answer this question…..
I read about the Citicard Balance Transfer Checks. I have some of them laying around offering 2.99% until Nov 2010. I have about $8100 I’d like to transfer but the catch is that its on my husbands Citicard. Can I write the check to him directly, and then have him pay off his credit card from his bank account? I can’t see how Citi could block that but if so I’d really like to know how ahead of time
Thanks!
June 25th, 2009 at 7:39 pm
I just got a letter from Chase saying they are increasing my minimum payment percectage to 5%. It was 2%. Now my payment will increase from $451 to $1112. There is no way we can afford such a payment. We have a large balance of $22000 which I have worked hard at paying down (paying more that the minimum due and on time). Now I don’t know what to do- my increased payment starts in August. I’m looking into doing a balance transfer but I don’t think any credit card co. would allow me to transfer such a large amount especially in today’s credit crunch. We have a good fico score of about 750. Does anyone know if this is possible or know of any credit card co’s that might be willing to let us transfer that much? If not, I don’t think it would be worth it to just transfer say $5,000 of it. My payment on the rest would still be too much. I hope someone can give me some advice.
June 25th, 2009 at 10:19 pm
I’d call them. Tell them what you can afford. Tell them you want to pay them in full but you simply cannot afford their new minimum. If they don’t work something out with you then you could talk with an attorney or credit counselor. Or, just say SCREW THEM and never pay them a penny. I doubt they will sue you. And, even if they do – so be it. There are no debtor’s prisons in America any more. So, ‘it will ruin my credit score’ you say? Who cares. Who really needs it. The country was FINE/BETTER before all this credit score/FICO BS started anyway. It is just a paper-tiger club that they try to scare you with. THEY ARE CROOKS. They need BILLIONS to stay afloat yet try (and do – if we let them) to rape the little guy (US TAX-PAYERS that are keeping them afloat….)
REVOLT! Don’t pay the crooks. Unless and until you and I start receiving our monthly dividend checks in the mail as partial stock holders of the business since it is our tax payer dollars that keeps this crooked, evil beast alive . . . .
June 27th, 2009 at 7:24 pm
I have an update. We called Chase today and I really expected to hear that there is nothing they could do for our situation. But to my surprise, the service rep transfered us to a dept that works with customers who are eligible but it does require that you close down your account. They offered to give us a fixed interest rate of 6% with payments over 5 yrs. Our payment will be $438 every mo. This sounds great and a far cry from the $1100 it would have been. They are not a third party and are called Proactive. They said that because we have such a good credit history they could help us. I asked if it would hurt our credit report to do this and she said no because we would be voluntarily closing the account and it would still show up as current payments with Chase. So please call Chase to see if they can work with you first before you do anything else, especially if you have good credit and made payments on time with Chase. The number Chase transfered me to is 1 800 404 6220. But call the number on your bill first and find out if you are eligible. Hope this helps some people.
Again, we are still thinking about it but we are pretty sure we are going for it since going to the CCCS (credit counseling) might involve them keeping your credit cards except one for emergency and would show up on your credit report as a third party making the payments for you. Otherwise, than that, they look to be a great co. to work with and a good choice if you go that route. They are recommended by Suze Orman, the financial guru.
June 28th, 2009 at 3:29 am
i just wanted to know if you believed in the ATM card with zero balance since one year at the same time it was already expired and still can withdraw money from ATM machine. the type of account is SAVING not CURRENT please help me to know the rights of the card owner and what is the risk. thank you and have a nice day..
August 4th, 2009 at 11:05 pm
I AM NEW TO ALL THESE TRANSFERS AND I NEED SOMEONE’S HELP! I WANT TO TRANSFER MY BALANCE FROM ONE CARD TO ANOTHER BUT I HAVE A FORECLOSURE ON MY RECORD, CAN I STILL APPLY FOR THE CARD WITH 0% APR AND TRANSFER BALANCE OF $1000 TO IT. MY CURRENT PERCENT ON BANK OF AMERICA CREDIT CARD IS 27% !!! I PAY ALMOST THE SAME AMOUNT ON INTEREST AS ON PRINCIPAL..THEY RAISED BECAUSE OF COUPLE LATE PAYMENTS AND COULDNT DROP IT DOWN BECAUSE OF FORECLOSURE! HOW UNFARE IT IS, I AM A GOOD CUSTOMER, JUST HAPPENED TO BE LATE PAYMENTS DUE TO MY MOVING, SO NOW IAM SUFFERING WITH HIGH % RATE, CAN ANYONE SUGGEST ME WHAT TO DO AND IF IT MAKES SENCE TO APPLY TO 0% APR CREDIT CARD WITH MY CREDIT HISTORY….
September 9th, 2009 at 12:08 pm
What are the impacts of the credit card laws that go into effect in February 2010. There are many analysts predicting that we are nearing the end of zero percent introductory offers because of the new laws signed last august that dont fully go into effect until february.
From what i gathered the laws will require that new accounts cannot have a promotional APR raised within the first years. Since banks offering zero pecent intro rates were counting on some people defaulting and taking a higher interest rate, does this mean the end of the zero pecent balance transfer game?
September 9th, 2009 at 12:15 pm
Well Russ, I don’t necessarily think balance transfer cards will completely die out 100%, as I truly believe credit card issuers will ultimately find a way to adapt and restructure their 0% APR offers to allow consumers to continue taking advantage of such features while also allowing themselves the ability to profit in some way.
But the biggest thing that the new credit card rules will do is severely restrict the credit card issuers’ ability to direct card member payments towards lower interest rate balances first before applying them towards higher rate balances. Their ability to do this was one of the reasons why balance transfer cards were so profitable for the issuers and so widely promoted during the heyday. Not being able to restructure credit card payments in this way will severely limit the issuers’ incentive to offer balance transfers in the future.
December 9th, 2009 at 10:24 am
Hi Raymond, I just applied online for the virgin offer of 0% interest for 16mths on balance transfers and intend to use it immediately for paying off my debt. I am confused as after completion it says congratulations you are accepted and you now have £2000 credit. Does this mean i now “owe them my previous debt from my last card supplier but I also have £2000, credit on top? also what about my other card that i transferred from, i am assuming i owe them nothing any more , will i still have my credit that i had originally available to spend ? (not that i intend to.)
February 8th, 2010 at 4:32 pm
Hey Raymond,
I am a small business owner and was interested in applying for a credit card with a $0 annual fee, 0% apr for 12 monthes, and either a 0% or 3% balance transfer fee. The only problem is, I want to be able to balance transfer an amount of about $30,000, and not a lot of credit card companies nowadays are allowing that large of a credit limit. Given that i have an excellent credit rating, what companies should I look into to apply? Continuously applying for new credit cards just to find out the credit limit can’t be helping my credit score. Any suggestions?