OK girls, it time for one of those boring but important subjects, balance transfers. Balance transfers have become a popular way for people to manage their personal debt and are relatively quick to organize and reasonably cheap to effect. But it is still important to work out the cost of the switch and then decide if a balance transfer is the best way forward for you. You might find after doing all your sums that in fact it is actually doesn’t save you any money and therefore would be a waste of time. Here are 7 Essential Factors to Consider Before Making those Hefty Balance Transfers:
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1. The Transfer Amount
If the outstanding balance on your current card is large, then the new card provider may not allow you to transfer the whole amount. New cards will be issued with an upper limit that you won’t be allowed to exceed. However, savings may still be made just by transferring part of your existing balance if the interest rate is significantly lower and there isn’t a punitive transfer fee.
2. Balance Transfer Fees
The fees charged by the credit card companies can mean that the cost of your balance transfer will be much more than you had anticipated. Make sure that you calculate the fees before making the final balance transfer, even a seemingly low percentage rate can equate to a lot of money if the amount you are transferring is large.
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3. Your Existing Credit Score
Keep an eye on your credit score as this is how credit card companies determine the type of balance transfer to offer you. A top class rating will assist you to receive the best offers and make the balance transfer cheaper than it otherwise would have been. Occasionally 0% transfers with long term repayment terms are available.
4. The Effect on Your Credit Score
If you apply for a new credit card or submit an application to have your credit limit increased, even for the purposes of balance transfer, it will have a significant although probably temporary effect on your overall credit rating. Be wary of this especially if you know that you will be applying for a loan any time soon.
5. Your Credit Card Habits
You need to be personally disciplined if your balance transfer plan is to be successful and you will need to stick to your long term plan of getting the level of your overall debt down, no matter what. Unfortunately it can be all too easy to forget the plan when you are in difficult situations and it is easy to let bad habits take over and use the new card as an excuse to spend even more.
6. The Possibility That the Offer You See Isn’t What You Receive
Beware of letters arriving in the post and telling you that you have already been approved for a balance transfer offer because, when you send the application form, the amount you are offered may be different. As long as you are still satisfied with the second deal, it is probably still worth transferring your balance but make sure you do the sums and confirm that the second offer will still benefit you.
7. The Time It Takes to Transfer the Balance
You will be familiar with the saying that ‘time is money’ and this should be applied to the time you take to compare cards, finding the most appropriate balance transfer, filling in application forms as well as all the administration that goes along with it. Bear all this in mind, set some time aside and devote the time the balance transfer deserves, it will be worth it in the long run.
I hope that this has helped you to decide whether a balance transfer is the right way forward for you. Just remember girls, balance transfers can be an easy and cheap short term solution to debt but it is only a temporary fix and they don’t actually get rid of the problem. They may be boring and common sense, but my Factors to Consider Before Making Those Hefty Balance Transfers will help.
Do you know of any good balance transfer deals reader should be looking at?
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