Credit card balance transfer is a tool used by card companies to entice you to start using their cards in hopes that you will continue using their cards even after the balance transfer promotion is over – regardless of whether you pay off those balances you transferred or not. If you know a few simple techniques, you will be able to use credit card balance transfer to your advantage. Let’s go over a few basics on credit card balance transfer you need to know.
In Canada, you will usually get notifications of balance transfer offers in the mail. It is also a good idea to keep an eye on credit card company websites. Also, you can call their customer support line occasionally to check if any balance transfer promotion is going on.
Once you have a balance transfer promotion offer, read the terms and conditions carefully. Here are some tips to help you to get maximum benefit from a balance transfer:
How long the balance transfer will last – Pay attention to the start and end date of the balance transfer offer. Do not start before this date, even a single day ahead can make you pay very high interest. Likewise, do not stretch beyond the last date. Use Google Calendar, a reminder on your cell phone, or any other reminder to remind you at least 3 business days ahead of the actual end date so you will have enough time to pay before the deadline.
Avoid balance transfer fees – In Canada, usually these types of charges are not seen. However, you still need to make sure that it does not exist.
Write Cheques – If you get the offer in the mail, it usually includes customized cheques only for balance transfer purposes. You can use these cheques to pay off other high-balance cards, or you can deposit cash to your own account (using these cheques) and then pay off other credit cards from your bank account. Using these specialized cheques as cash should be written in the terms and conditions. Make sure that you will not be charged high interest for paying other credit cards by taking cash. Call customer service if you need to be sure.
Transfer by calling the customer service line – You can also transfer by calling the customer service line of the card that is offering the balance transfer. Sometimes, you will only be able to transfer to other credit cards; sometimes you will have the option to take cash in your bank account (linked to your credit card) and then you will be able to pay to other credit cards from your own bank account. Ask customer service which options are available and pick the one that is most convenient for you.
Do not pass your deadline – As I mentioned before, under no circumstances should you delay paying off the balances you used for those promotional months. Even a single day delay can make you pay additional fees and high-interest (instead of low interest) penalty and the whole purpose of transferring your balance will be forfeited. So avoid this at any cost.
More than one offer – Sometimes, you will get a balance transfer offer from more than one company. Use your judgment to pick the best offer. Usually, the lowest rate with the longer time-period offers the best value. However, a little higher rate with a longer term than a lower rate with a shorter term may be a better one to pick.
A lot of us decide not to utilize credit card balance transfer because of the hassle and steps involved with it. However, these few steps and a little hassle can save you some money. And it’s never wrong to save a few bucks here and there – it all adds up.
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