Photo credit: TheTruthAbout
I bet you receive irresistible visa balance transfer offers from time to time.
They go something like this:
BIG PRINT: BALANCE TRANSFERS 2.9%
Medium Print: for the first 6 months, then….
Fine Print: I’ll get to that, but first,
These can be a good deal, but you do need to read the fine print. Be savvy. You could stand to win, or to lose.
Watch for the following in the fine print:
- Balance transfer fee. Sometimes you will pay a percentage right up front on whatever you transfer. Factor that in – is it still a good deal?
- Dramatic rate increase if you’re late on a payment. One of my friends transferred a large balance, was a bit disorganized and missed a payment, and suddenly the low balance deal was canceled and the new rate was over 20%.
- Payments applied to low-interest portion first. This is fair, but watch that it doesn’t bite you. Here’s how it can. Let’s say you transfer $5000 to the new card. Then you go out for dinner/drinks and put the $100 tab on your visa. That $100 is at the high interest rate, since it’s a new charge, and you can’t pay it off til the entire low-interest $5000 portion is paid off first. Do that a few times (go out to dinner, buy books, purchase plane tickets) and you could end up with $2 or $3K or whatever at the high interest, and again, it’s impossible to pay off until the original $5K is all paid off.
Again, transferring balances can work in your favour; just keep your wits about you and read the fine print.
Readers: Any fine-print that I missed? Or any stories to share on the topic?