Watch Out for Hefty Balance Transfer Fees

It seems nowadays the latest rage is using balance transfers to move credit card debt around without paying much of it off, all while avoiding finance charges.

While this is a great concept, and one that makes a lot of sense if you have debt you’d rather pay down slowly, it can get tricky over time.

One problem is that after a few balance transfers you’ll run out credit card providers to move the balance to. The second is that your credit may get dinged, or credit card providers may see a pattern in your balance transfer arbitrage and deny you new credit.

Either way, you probably will be able to play the balance transfer game for quite a while if you pay your bills on time each month and pay down debts a touch above the minimum required.

But don’t assume credit card balance transfers don’t come without fees. Many balance transfers hit you for 3% of the balance, or a $50 or $75 maximum. The minimum tends to be around $10.

While it may not seem like a lot, if you keep transferring credit card balances and pay $75 a pop, the process will begin to feel a lot like paying finance charges. If that’s the case, you may want to consider a low APR credit card that is fixed until you pay off your balance.

Instead of moving balances time and time again, try to lock in a low APR of 1.99% or 2.99% for the life of the balance. You may end up saving money, and you won’t be taking your credit through the spin-cycle.

However, if you’re insistent on playing the balance transfer game, stick to the credit card issuers that have “no fee balance transfers”. These include most Citi cards and Discover cards. Chase, AMEX, HSBC, and most of the other providers typically charge the 3%.

Related Topics:

1. Watch Out for Multiple Balance Transfer Fees
2. Choosing a Balance Transfer Credit Card
3. No Fee Balance Transfer Credit Cards
4. Is the No Fee Balance Transfer a Dying Breed?
5. Why Credit Card Providers Offer Balance Transfers