Credit Card Balance Transfers - 6 Disasters to Avoid

Before looking to transact a balance transfer on a new credit card, be aware that a number of unpleasant consequences can occur to your finances should a miscommunication occur between you and the credit card agent who is facilitating the transaction. This article discusses six balance transfer disasters to avoid.

Balance Transfers On Rise

It's no news that, in these tough economic times, credit card customers are looking for low promotional rates on balance transfers. What most people do not know, however, is that problems with balance transfers are also on the rise, primarily due to miscommunication between credit card agents and the customers they serve. Problems include:

Balance Transfers That Fail Surprise Interest Rates Surprise Fees Surprise Time Frames Unexpected Payment Allocation Provisions Differing APR's In Account Segments

Customers on the receiving end of these surprises are, understandably, upset because each surprise costs them time, money and frustration. Adding to the frustration is the fact that, each time a customer calls his credit card company, he talks to a different agent. Let's look at each instance in more detail to understand the impact each has on a credit card customer.

Balance Transfers That Fail - An Example

A customer calls in to shift a high interest loan from credit card account A to low interest credit card account B. At the end of his phone call, he believes that the transfer has been approved and account A will be paid off.

Two or three weeks later this customer discovers that credit card account A never received any funds from account B. When he calls customer service for account B, he discovers that the deal did not go through and, according to this agent, is never going to go through.

Worst Case Scenario: Anticipating that loan A would be paid in full the customer did not make his payment. He is hit with a late payment fee of $39, his account is "re-priced" as a result of being late, and his interest rate on loan A is doubled. This late payment will affect his credit score and it is unlikely that he will be able to get a balance transfer elsewhere in order to get out from under the doubled interest rate.

Surprise Interest Rates

A customer calls in to take advantage of a zero percent promotional rate on a balance transfer. He transfers a 9% loan from credit card account A to what he understands will be a one-year 0% loan on credit card account B. He expects to pay no interest for a year. Yet, when he receives his first statement he discovers that his "low interest" transferred loan has an 18% annual interest rate.

Worst Case Scenario: Fuming, the customer takes his frustration out on the next credit card agent who then has no desire "go out on a limb" in trying to get an interest credit for him. The agent checks the record, sees that the terms to which the customer agreed stipulated an 18% interest rate and tells the customer that, if he doesn't like the rate, he can pay off his account.

Surprise Fees

A customer responds to a promotional offer and calls in to transfer eight thousand dollars from credit card account A to his new credit card account B.

He understands that he will get a low promotional rate for the first six months, plus he thinks the agent agreed that he will not be charged a transfer fee (normally 1% to 3% of the balance being transferred).

When he receives his statement he is stunned to see a charge for $240.00 (3% of $8,000.00) which has been billed to his account as a fee for transacting the transfer.

Worse Case Scenario: Once funds are transferred, the terms under which the balance transfer occurred cannot be changed. Therefore, the 3% upfront transfer fee will stand.

Should the next credit card agent be persuaded to believe the customer was misled into believing that there would be no upfront fee, that agent may get authorization to credit the customer's account with an amount equal to the fee. However, if he believes that the customer knew what he was agreeing to, the fee will stand.

Surprise Time Frames

A customer transfers a balance of $5,000.00 from a credit card with a 12% interest rate to a new credit card account. He understood that the new account would have a zero percent interest rate for a year. While everything is fine for six months, in month seven he looks at his credit card statement and sees that his interest rate is now 18%.

Once funds are transferred, the terms under which the balance transfer occurred cannot be changed. Therefore, the 18% interest rate is the interest rate on his account. Should the credit card agent be persuaded to believe a technical glitch is responsible for the change, or that the customer was misled into believing that he entered into an agreement based upon a lower interest rate for a full twelve months, the agent may get authorization to credit the customer's account with an amount equal to the interest charged in month seven.

However, since anticipated or estimated future interest will never be credited to an account, the customer will have to call back in months eight, nine, ten, eleven and twelve if he wants credit for the interest added in those months. Each time he will have to re-explain his situation and request that his account receive a credit for the interest added that month.

Since the customer will talk to a different agent each time he calls in, he may have different results from month-to-month. Or, he may be told that he will not receive any more credits.

Worst Case Scenario: If the first agent, who speaks with the customer when he first calls in month seven, sees any kind of on-screen documentation that leads him to believe that the customer knew that he was agreeing to an 18% interest rate beginning in month seven, the rate will stand and there will be no adjustments at all.

Unexpected Payment Allocations

A customer takes advantage of a zero percent offer on a balance transfer and transacts a balance transfer for $10,000.00. He believes he has been told that he can allocate payments specifically to his purchase balance, so he goes ahead and uses the new card for purchases as well. Although his purchase rate is 18%, his intention is to pay off his new purchases each month so he pays no interest.

When he takes the time to examine his first (or second or third) statement, he realizes that all his payments are going toward the 0% interest balance transfer portion of his account while his higher interest purchase balance remains unreduced and is collecting interest at 18%.

Worse Scenario: Unfortunately, the worst scenario is the only scenario. No money he pays will be applied to his high-interest purchase balance until his balance transfer is repaid in full.

Differing APR's In Account Segments

A customer, who wants to buy a new TV, calls in response to a credit card offer he has received which advertises a a zero percent promotional rate on purchases. He does not ask whether the 0% interest rate also applies to balance transfers or cash advances. Instead, he assumes that it does. He decides to transfer $3,000.00 from a card on which a 2.4% promotional rate is set to expire. Then, in the forty-five-day interval before he receives his first statement for his new credit card, he charges a $2,500.00 big screen TV and gets a $300.00 cash advance at an ATM.

Worse Case Scenario: The 0% promotional rate only applies to purchases. The rate for cash advances is 21% and the rate for balance transfers is 18%. Due to a special provision, all payments he makes will be allocated first to his $2,500.00 purchases balance until it is paid off. All payments thereafter will be applied to his balance transfer loan of $3,000.00 (plus ongoing interest at 18%) until it is paid off. Meanwhile, interest will accrue on $300.00 at 21% until everything else on the account is paid off.

CAUSES

While some of these problems can be caused by technological glitches, I am told that the majority occur as a result of "communication" errors. For a detailed understanding of the factors which contribute to those errors, I refer the reader to my article "Could You Repeat That?" - Communication Challenges For Credit Card Agents.

SUMMARY

In our current economic climate more credit card customers are seeking out low-interest promotional balance transfers as a way to help them manage their debt.

However, there is always the possibility of miscommunication or mistake in regard to the terms agreed upon. When terms are misunderstood, then getting a new card and transacting a balance transfer can be pointless at best, and a financial disaster at worst.

Terms cannot be changed once funds have been transferred, so it is vital that credit cardholders understand what can go wrong in transacting a balance transfer.

Since it is the credit cardholder who will suffer should a balance transfer "go bad," knowing what can go wrong is not enough. He must adopt a pro-active strategy to make sure his transaction has the greatest possibility of "going right." To that end I refer readers to my article Credit Card Balance Transfers - How To Avoid Disaster.

©2009 Clyo Beck. The author asserts her moral rights.

Clyo Beck is the co-author of Money Saving Credit Card Secrets, an indispensible and practical guide on to how to avoid credit card hassles and save money that will pay for itself many times over. It is the best investment any credit card user can make.

For more free tips, or to preview the first four chapters of Money Saving Credit Card Secrets without cost, visit http://www.moneysavingcreditcardsecrets.com.

Credit Card Balance Transfers

In the current financial climate, many of us are looking for ways in which to reduce our debts and save money. If you're looking for a new UK credit card and you have balances left to pay on other credit cards or store cards, you may want to consider applying for a credit card that allows balance transfers.

What is a Balance Transfer?

Making a credit card balance transfer means that you transfer your debts with other credit cards and store cards to your new credit card. You simply provide the details of your other credit cards and store cards to your new credit card provider, and the balances will be transferred to your new card.

The Benefits of Balance Transfers

The main benefit of a balance transfer is that it can save you money and therefore allow you to clear your debts in less time. In order to make the most of a balance transfer facility, you will need to look for a card that offers 0% balance transfers. This means that for a specified time, you won't be paying interest on your transferred balance.

This doesn't mean that your monthly payments will be cheaper, as you will have to pay at least the minimum monthly repayment set by your card provider. However, it does mean that your money will be going towards paying off your debt, rather than paying interest, so this will mean that you can pay your balance off quicker.

A second benefit of a credit card balance transfer is that, as you can transfer the balances from a number of credit cards and store cards to your new credit card, it can make it easier to keep track of your finances.

Balance Transfers - Things to Look For

Here are some hints and tips on what to look out for when choosing a credit card in order to transfer your balances from other cards:

· Make sure that you choose a card which offers a long 0% balance transfer period. Different providers offer different 0% interest periods on balance transfers, so compare them before applying for your new credit card.

· Check to see what fees you will be charged for transferring any balances to your new card. Most providers will charge a percentage of the transaction amount, so compare charges before choosing a credit card.

· Check to see what the annual percentage rate (APR) is on any card that you're considering. When you have reached the end of your 0% interest period, you will need to pay the card's standard APR on this balance, so make sure that it is competitive.

· Make sure that you can afford to pay at least the minimum monthly repayment each month, as if you pay your bill late, your credit card provider may cancel your 0% interest balance transfer arrangement. Check the terms and conditions applicable to any credit card before applying, as breaching them may also result in cancellation of the 0% interest deal.

· Make sure that you know the order in which your card provider will apply payments to your account. Most card providers will use the payments that you make to pay off your transferred balance first, so if you make any new purchases on your card, they could prove to be expensive. If you do intend to use your new card to buy things, look for one that offers a 0% interest on purchases period.

Credit Card Balance Transfer Tips

Eliminating high interest credit cards by transferring to a card with a
lower rate can help you save a great deal of money, allowing you to regain
control of your finances. However, it is important that you understand all of
the terms and conditions of your new credit card before committing enrollment.
You want to make certain that the card offer is fair and that you are truly
going to benefit from it. Featured are tips that will help you choose and use
the right credit card for transferring balances.

Pre-determining interest rates

Most balance transfer offers are good for only the first 6-9 months of
enrollment. At the conclusion of the introductory rate, the card will convert to
a more standard rate, typically between 14-20%. It is important that you
determine what the interest rate is going to be once the intro rate is over. If
you are not sure what interest rate the card is going to be charging at the
conclusion of the intro offer, call the issuer and find out.

New purchase interest rates don't equal the balance transfer rates

The intent of transferring credit card balances is to obtain a lower
interest rate and eliminate your debt quicker. It is important to note that the
balance transfer interest rate is not going to be the same for new purchases
made with the credit card. In fact, new purchase rates are going to be higher.
Also, payments that you make towards your credit card bill are going to be
applied towards the balance transfer debt first, until they are eliminated. As a
result, you are going to end paying a lot of money in interest costs for new
purchases. It would be wise for you to pay off all of your balance transfers
prior to making any new purchases with your credit card.

You should also be aware that many issuers will apply the introductory rate to
new charges only. Therefore, you will end up paying the full standard interest
rate on your balance transfers, defeating the purpose of saving money while
eliminating your debt. Obviously these type of card offers are not ideal
for balance transfers and should be avoided.

Know what fees are associated with transferring balances

It is very likely that you are going to be charged a percentage when
transferring credit card balances. This fee is usually 4-5%, with a $35-50 cap.
Unfortunately, many credit card issuers have decided to eliminate the cap;
resulting in consumers having to pay hundreds of dollars when transferring $1500
or more. Even worse, this fee is often considered a new purchase, meaning you
pay a high interest rate for this portion of your card's balance. Therefore, you
should look to apply for a credit card that offers caps on balance transfer fees
and costs.

Be alert of bait-and-switch schemes

Offers are not always what they seem. Suppose your credit score is 550. It is
likely that when you submit a request for a particular card offer, that the
issuer presents you with an offer that is geared more towards people with bad
credit. Specifically having a higher interest rate and no introductory offer.
You can get approved, and not even be informed that the approval is for a
different credit card. You probably won't even realize until after you receive
your first statement. Therefore, it is crucial that you read the terms and
conditions of the card you are approved for before you transfer any of your
balances, or make any new charges.

Don't be late on your payment

It does not matter if you are one day late or ten days late. Being delinquent on
your payment will result in you losing your introductory offer!

Jacob Joseph is a financial expert for http://www.starloanservices.com. At Star Loan Services you can apply for credit cards for people with bad credit.

Credit Card Balance Transfer Applications

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A balance transfer is an easy way to escape the high interest charged on credit cards. Card companies, therefore, get large number of credit card balance transfer applications. Many people look upon this opportunity as a means of ending their debts. However, they are mistaken.

The monthly payments are still to be maintained. The only difference is that a zero or low interest rate could be enjoyed only for a stipulated period. This period varies from six months to a year. The interest is restored to the normal level after this period.

People with an outstanding balance on their credit card accounts make the most out of the balance transfer offers. A credit card balance transfer offers you the option of transferring either the whole balance or part of it. An initial time period of low or zero interest on the new card can be enjoyed by the customer. During this period, you can make considerable savings to decrease your debt. People often make the mistake of spending money lavishly during this period owing to the lower interest. Some credit card companies offer you the chance to transfer your existing loans and overdrafts to the new account. Offers like this attract many people to credit card balance transfer offers.

Credit card balance transfers have many drawbacks, too. You have to consider many things before proceeding with a credit card balance transfer application. Some companies charge a transaction fee for transferring the account, which can be as high as four percent of the balance amount. Any delay in monthly payments can lead to a sudden rise in interest rates. Credit card companies usually advertise low interest on balance transfers prominently. However, they may not specify the hidden costs attached. The major terms and conditions are usually specified in small print in the credit card balance transfer offer. Many people fail to read this information and go ahead with credit card balance transfer application to their disadvantage.

Balance Transfers provides detailed information on Balance Transfers, Credit Card Balance Transfers, Card Credit Interest Balance Transfers, Interest Free Balance Transfers and more. Balance Transfers is affiliated with Guaranteed UK Credit Cards [http://www.e-UKCreditCards.com].

Credit Card Balance Transfer Offers - Join the Wave

Balance transfer credit card offers have been a popular means of literally transferring a balance from one credit card to the next. The primary reason that someone would enact a balance transfer is so that he or she could obtain a lower interest rate than his or her current credit card offers. Balance transfers are relatively easy moves, provided that you find a balance transfer credit card that can accept you into the lucrative balance transfer program at a lower rate than your current company. There are a few essential items that you should know about balance transfers before you begin the process and "join the wave".

What Is a Balance Transfer?

A balance transfer is a simple strategy that many people use in order to obtain the most appealing interest rate. Quite literally, a credit card balance transfer requires that you take the balance on your current credit card and roll it into a balance transfer credit card program with a competing credit card company. It is important to note that while many credit card companies offer appealing balance transfer credit cards, you should first ensure that you are eligible to perform a balance transfer and lock in at a low rate before you initiate the procedure. If you have a low credit score, you may not find a credit card company that will offer a balance transfer credit card to you until your score increases.

How Balance Transfers Effect Your Credit Score

Whether you think it's fair or not, if you frequently switch from one balance transfer credit card program to the next, you will not proceed unnoticed. Credit card companies will eventually catch on to your migrant tendencies and thus, decrease your credit score and increase the available rate for you. Therefore, if you are a chain user of balance transfer credit cards, you run the risk of negatively effecting your credit score in the long-run. Credit card companies will be weary of an individual that has a history of performing balance transfers, and therefore, may lock you into a higher interest rate to ensure that they do not lose money by taking you on as a client.

When Not to Initiate a Balance Transfer

If you are lucky enough to be locked in with a credit card company at a good interest rate, then it is a bad idea to engage in a balance transfer. Like any other balance transfer, a credit card balance transfer will most likely clear your credit card account with your original company and, thus, lock you into a relationship with a new credit card company. That new company may raise your rates to a level that is higher than your previous company after the initial low interest rate trial period. Therefore, before you initiate a balance transfer, it is important that you read the fine print on the company offering the balance transfer credit cards.

It can feel like finding a pot of gold when you find a balance transfer credit card that offers a low interest rate and other incentives to encourage you to make the switch. However, as with anytime you engage in a balance transfer, it is essential that you do ample research into exactly what the new credit card provides. Chances are good that any company that offers balance transfer credit cards is using the tried-and-true credit card balance transfer strategy to get a quick influx of clients. Educate yourself so that you can make an informed decision about your own balance transfer possibilities.

For more on credit card balance transfer offers, Robert Alan recommends that you visit CreditCardAssist.com

Transfer Your Credit Card Balances Successfully

The credit card system is a type of retail transaction settlement. It is named after the small plastic card issued to cardholders. A credit card differs from a debit card wherein, money is deducted from the users's account on every transaction. In the case of credit cards, the issuer offers a credit for a secified amount of time to the consumer.

Credit cards are also different from a charge card, which requires the balance to be paid in full each month. In contrast, credit card holders can 'revolve' their balance with an additional interest being charged on it. Most credit cards follow the ISO 7810 standard and are of the same shape and size.

Credit card transfer is an equitable way of managing one's credit card debt. The transfer of balance of one credit card to another often helps with the 'Teaser Rates' or the introductory rates that are generally offered by major credit card companies a couple of times a year. Usually, teaser rates last for either 3 or 6 months once the card is received. An interest rate is levied depending upon the offer available on the card (which may vary from 0% to up to 9%). It relieves the cardholder of a substantial amount of debt in case he/she transfers the balance from a higher interest rate to a lower one.

Some salient points to be kept in mind for a successful credit card balance transfer are as follows:

1. Timely transfer of balance of credit card. It should not overlap the relevant period as that may result in interest charges being levied upon the cardholder.

2. Availability of zero credit card money transfer on time.

3. Make yourself aware of the offer available on the credit card. Read printings on the promo sheet to gauge its process.

4. Transfer all credit card balances to normal interest card as the store cards may have higher APR rate.

5. Be well informed about the comparison of the two cards against their interest rates and their credibility. A financial broker can help decide upon the choice of a good and interest free credit card, or a lender that offers zero introductory balance rates.

6. Be aware of the expiry date of the zero balance credit card so that it can be re-applied for well in time.

7. As soon as one receives the new credit card, make a call to the lender to improvise your plan of money transfer from the previous one.

8. Do not opt for offers or privileges that may not be of much immediate use (like insurance policies, etc.)

9. Once the transfer of balance from the previous credit card to the new account is completed, close the former account and destroy the card.

10. As the new account now has zero introductory rate, one would be required a minimum rate to repay every month during the stipulated period.

Ensuring all these tenets can help towards a successful transfer of your credit card balance. However, the best way of maintaining one's inflow is to avoid exceeding expenditure with respect to what you earn.

Joe Kenny writes for the Card Guide, a UK based credit cards site, visit today for introductory 0% balance transfers and start clearing credit card debt today.

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How To Find Credit Card Balance Transfer Offers

There are so many credit card balance transfer offers to choose from that it can be hard to wade through all the information available.. However, you can avoid this time consuming and difficult process by using an online credit transfer service. These services have done most of the work for you by sifting through a lot of the products on offer and presenting some of the best offers for you to choose from. Furthermore, they generally offer the ability to apply online through their websites, making the process even easier.

The purpose of credit card balance transfer offers is to generate new customers for credit card providers. Credit card holders are encouraged to transfer their credit card balances to a new introductory credit card with a low or zero interest rate for a specified period of time. Naturally, such an offer is highly attractive, particularly if people are paying high interest rates every month. However, once the introductory period has expired the new customer then pays the full interest rate.

The benefit of credit card balance transfer offers to the consumer is the opportunity to save substantially on monthly interest costs for the term of the introductory period. What a lot of people don't realize is that you can transfer your balance to zero-rate cards as often as you wish. In other words, when your introductory period is close to expiring you can apply to transfer your balance to a new interest-free card. At the end of the interest-free period of this card, you do it all over again. As long as you choose cards with low-rate periods of at least twelve months this process should not become too burdensome.

The financial benefits of doing this can be significant, particularly for those individuals with high credit card debt. However, remembering that your interest-free period is coming to an end can be a problem. Some of the better online credit card transfer sites offer a reminder service to counter this problem. You can opt to receive an alert to let you know when you need to apply for a new zero-rate credit card. This service can save you a lot of money because if you don't remember to do this, you will be back paying interest before you know it.

The reason to take advantage of low and zero-rate cards is to keep more of your income for you and less for the bank (or other financial institution). This means that the best credit card balance transfer offers will have low upfront costs and zero interest for a substantial introductory period. The goal is to minimize your costs and maximize your savings. If you are wise, some of those savings will go to reducing your credit card balance and getting out of debt as soon as possible.

Just because credit card balance transfer offers are marketing strategies for financial institutions, doesn't mean they can't be profitable for you. If you use the services of a good online credit transfer website and sign up to be alerted when the introductory period is near an end, you will be able to stay free of interest charges. You will have more money to meet your own and your family's needs, less stress and a rosier financial future.








Gordon Goodfellow's site shows you how to find credit card balance transfer offers in addition to offering 0 APR cards which remain interest-free for years. His associate site offers credit card transfers in the UK.

What to Look for in a Credit Card Balance Transfer

A great way to reduce your interest payments each month is to look at a credit card balance transfer. However not all transfers are as good as they sound and you should always be cautious when you are going to process a credit card balance transfer.

I recently had a credit card balance transfer that worked out very well which was a relief because the previous one was a complete nightmare. I am going to tell you about both because I think it is very important that when YOU carry out a credit card balance transfer you know what homework to do before you go ahead with that transaction.

The first and the worse was around 2 years ago I had to renew some qualifications and to do so had to get some money quickly. I took out a credit card and put the cost of the training and the qualifications on there (at the time my employer was going to pay for the qualifications but later decided this wasn't the case which will explain more later on). I paid went on the course got my qualification and went back to work. A few months later I found myself with a high rate of interest on the credit card and a balance that was almost increasing every month rather than going down because I was paying the minimum.

I had a credit card offer through the post for a balance transfer lower interest for 6 months, I jumped at the chance obviously. A few days later I received all the paper work and realized very quickly that only half of my previous balance had been transferred! Alarm bells ringing I called the new company and asked them what was going on. I was told that although my credit limit on my new card was double what had been paid off the old balance, I could only use half of that credit limit to carry out a credit card balance transfer! The meant rather than putting everything on a card with a lower rate for six months I was now stuck with two cards and the original one was at the original rate! I eventually paid off these balances although it took a while but this was a major mistake on my behalf not asking if the whole balance could be transferred.

The second time was after I needed to fly to Australia for a funeral and I had to get my hands on the money very quickly. I purchased my ticket on the second card which I kept for the exact purpose that it was used, an emergency. When I got back I had a credit card bill waiting for me and when I opened it and saw what the projected interest on the money was I quickly started looking around for a better deal.

This time so not as to be caught out I found out that I could transfer 75% of my balance. The first thing I did was to call my old credit card company and tell them that I was able to transfer the whole balance to a new company and get a better rate than them for 9 months (a little white lie I was only getting a better rate for 6 months although after that the rate was still 4% cheaper). The lady on the phone told me that she would check. She came back with an offer of interest free for 6 months on my current balance. So I transferred 50% and kept 50% where it was. Now again it was split but and this is the big but when getting making a credit card balance transfer, I was better off because the payments were less and the balance was interest free so what I paid came off the bottom line. After the six months I repeated the whole process and ended up with a single account interest free for 6 months which meant that I was able to pay off everything.

It is important to remember that if you get an interest free credit card balance transfer then you need to make sure you don't use that card for anything else. The credit card companies are very clever and anything else you spend gets paid off first because the interest rate on the money you borrowed is higher so they make more money that way! (clever!)

These are just a few tips on what to look for in a credit card balance transfer.