One of the most important saviors for credit card users is the ability to transfer balance from the cards which carry debt of high interest rate to the credit cards keeping much low interest rate. This ability of credit card users help them from stages of bankruptcy. This balance transfer feature is very useful for multi credit card users. This helps for users to keep one credit card for daily expenses and the other for only emergency funds.
The vital part about credit card balance transfer that most card users forget to notice is that most credit card providers charge some amount for credit card transfer. There are many offers that are provided by banks showing 0 percent balance transfer fee. Most card holders do not read between the lines as those offers carry many terms and conditions. Many people think transfer fees as small amounts but these amounts add up to much higher charges.
There are many things about balance transfer fee that most credit card users do not know about. Given are the various factors and facts that costs credit cards users hefty balance transfer charges.
Adds your Debt amount
It must be taken into account that most balance transfer fees charged by banks are three to five percentage. The fact that most credit card users do not look is that the charge amount is added to the debt about amount that needs to be paid for the credit card.
- You have to more amount in addition to the already debt amount
- The balance transfer fee charges more if not paid within due dates
- The fees does not serve your initial purpose of paying off your bills as fast as possible
- Most banks start with 0 percentage fees for balance transfer but later starts charging amount
- The less charges taken for balance transfer adds up to bigger amount after few years
Increases your annual percentage rate (APR)
The disadvantage of balance transfer fees is that it increases the interest rate for the loan amount that you have taken from the bank. Any additional charges from other services of your bank will change the rate of interest to higher that the actual interest rate charged for the loan amount.
- The credit card users having debt have to pay more amount for their loans
- The short-term loan takers are affected more than the other loan takers
- The charges are collected first by the banks which increases your loan period
- Most loan takers do not know that the actual APR rate increases for balance transfer fees
- The transfer fee charges are cut from the actual loan amount
Affects short-term transfer takers
The interest rate is increased for the short-term loan takers in case of transferring balance from one credit card to another as part of credit card balance transfer fee. This increases the loan amount drastically.
- The interest rate for short-term loan takers increases to about five to ten percentage
- Most banks takes the adequate charges for balance transfers in all circumstances
- The loan period increases in case for the higher interest rates charged for short-term users
- Users making multiple balance transfers will have to pay much higher interest rates
- The zero percentage introductory balance transfer fee is adjusted by banks in later transactions and the full amount is credited
Charges high fee
There is no point in paying so much high fee in order to get balance transfer fee. Most of the credit card companies charge around three to five percentage as fees for balance transfer from one credit card to another.
- The high transfer fee is applied for transfering savings and debt
- Charges are also taken for withdrawals through ATM
- The charges for balance transfer is related to the amount that is moved from one credit card account to another
- Fees for balance transfer is higher that costs for moving money between acoounts
- The percentage charged as balance transfer varies from three to five
Things to learn:
In our Previous post we discuss about the different ways to buy gifts through Credit Card reward Points.Most of the banks gives attractive offers for the credit card users in pursuit to make money from the credit card balance transfer fee. The costs are arranged by the banks in such a way that the total charges for the purpose of balance transfer from the credit cards having high-interest rates to the cards that give much lower interest rates. It is advisable for the credit cards users to look for credit cards having no balance transfer fees and also read the terms and conditions carefully. You can also take the help of any professional financial adviser to tackle the situation.
— CreditHealth Care (@Credithealth24) December 27, 2017