Balance transfer cards allows you to transfer the balances from all your credit cards so that it is easier for you to pay off your debt. Once you have transferred all your balances to the balance transfer card, you have to set aside some money to make the repayment. You only have to make repayment on the balance transfer card. Not everyone who get approved for a 0% balance transfer card successfully pay off their balances. The following are the 3 mistakes that consumers of balance transfer cards often make.
1. You are Unaware of the Deadline of the 0% APR Promotional Period
One of the mistakes that people often make is that they did not find out about the deadline of the 0% APR introductory offer on the balance transfer card. It is important that you know the deadline so that you can make plan accordingly and pay off all your credit card debts by the time the offer comes to an end. The 0% APR introductory period will become valid starting from the time you open the account.
To determine how much you should pay for the balance transfer card, you should divide the balance by the number of months in the 0% APR introductory period. For example, if you owe $6,000 and the transfer fee is 3% on a balance transfer card with 12 months 0% introductory iffer, the total you have to pay back will be $515 ($6180/12).
2. You are Unaware of the Deadline for the Balance Transfer Fee to be Waived
Some cards also offer a deadline for waiving the balance transfer fee. The deadline offer is usually 1 – 4 months from the time of the opening of the account. You should always check to see if your balance transfer card has this kind of offer so that you can avoid paying for the balance transfer fee.
If you transfer your balance after this deadline, fees will automatically be charged onto your balance so that you pay back more. The average balance transfer fee is about 3% – 5%. Transferring your balances within this deadline would have helped you to save a few hundred dollars. For example, if you transfer $5,000, you would have save $250 in fees.
3. You Fail to Make Repayment on Time
Another mistake that many people make is that they forgot to make the repayment for the balance transfer card on time. Usually, it is stated in the clause about how you can lose your 0% APR if you are late in payment for a specific period of time. For example, you could lose the 0% introductory APR rate when you are late in payment for at least 60 days. To avoid being late in making repayment, you can enable automatic payment so that the amount you owe will automatically be deducted from your savings account.