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9009 West Loop South, Seventh Floor, Houston Texas
1-866-889-9347 |
CCCS of San Diego
A Division of Money Management International |
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Regional Headquarters - 2650 Camino del Rio North, Suite 209, San Diego California |
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Playing The Credit Card Swap Game Can Cost You Money |
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 The average American household holds six bank credit cards, which explains why the competition between credit card issues is running at an all time high. If you are like most Americans, you probably receive three to four new credit card solicitations a week. They all tempt with a slew of no interest or amazingly low teaser rates offers; but if you are not careful that zero percent can end up costing you thousands of dollars.
On face value, transferring a high credit card balance to a zero interest account will definitely save you money. However, there could be fees, penalties and other hidden costs that might possibly cost you more than you saved by transferring the balance in the first place. The key is to read the fine print on the application. Before making the switch, determine the following:
- Is there a charge for transferring the balance? Often this charge runs two to three percent of the transfer amount. For example, a balance of $8,000 will cost you $240 just to make the switch.
- What is the introductory rate and how long does it last? If the promotional rate lasts less than six months and your balance is sizable, can you realistically pay off the remaining balance during the no interest period? If not, then search for a card with a longer introductory rate or a card with a low fixed interest amount.
- What will the interest rate revert to after the promotional period is over? Is that interest rate higher than your current rate? What are the new credit issuer’s annual fees? Does the card have a minimum of 20 days grace period?
- Does the new credit issuer limit the amount of times you can transfer a balance? Is there a limit on the amount you can transfer? Only transferring partial amounts will most likely result in additional cards with open credit lines, which can result in further debt accumulation.
- Under what conditions can the credit issuer change the promotional interest rate? If your payment is late, does that automatically bump you to the higher interest rate?
Be sure that if you decide to make the switch, you determine how long it will take for the transfer to be complete and continue to make payments on the original card in the meantime. Additionally, close any old accounts after the transfer is complete to keep your credit history uncluttered.
For those with smaller balances and the discipline to pay off any remaining balances before the promotional rate ends, switching to a lower interest rate card can actually save them a substantial amount. As with all “great” offers, be sure to read the fine print and make sure you know what you are getting into before you make the leap.
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CCCS, A Division of Money Management International
Regional Headquarters - 2650 Camino del Rio North, Suite 209, San Diego California
Corporate Address - 9009 West Loop South, Seventh Floor, Houston, TX 77096
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