When you are considering transferring the balance of a debt to a low or zero interest credit card there are some very important questions you need to ask first. Do not allow the excitement of possibly paying off a debt ahead of time cloud your judgment. Once you have transferred your balances, you may not be able to move them again.
What is the lowest interest rate, and do you qualify for it?
If you already have credit card debt you may not qualify for the lowest interest rate. Your FICO credit score is also taken into account by credit card companies, if your credit score is below 700 you may not receive the lowest interest rates.
How long does the low or zero introductory interest rate last?
The normal time period for a low or zero introductory interest rate to last is six months. Some may last a year, and rarely you may find one that lasts the lifetime of the transfer. It’s best to consider whether or not you can actually pay off the transferred amount during the initial time.
What will you have to do to keep the low rate through its scheduled time?
There may be requirements you must meet to keep the offer going through its entire schedule. You may have to make at least one purchase a month, or never be late on a payment.
Does new purchases have the same interest rate as the transferred balance?
Do not assume that new purchases and transferred balances will have the same interest rate. Sometimes, new purchases fall under a higher interest rate, leading to a larger monthly bill. It can knock the feet out from under even the best financial plan. You should also know that your payment will typically pay to the balance with the lowest interest, leaving higher interest items to accrue on your bill. However, new purchases may have a longer grace period before they start accruing interest.
How is the average balance on the account figured?
If the company figures interest on a two-month average it will be an accumulation of the current billing period and the last period. This means interest is calculated on a daily average over two months, if you carry a balance you can lose the grace period on new purchases.
What is the best way to transfer a balance to the new card?
There may be several options open to you when transferring a balance to a new credit card, such as convenience checks or cash advance, each one may have different rates. You may even receive a number of convenience checks, each one having different terms and fees attached.
What measures does the credit card company take to protect your private information?
Identity theft has become an ever-increasing problem over the last few years. Your credit card company should be on top of protecting your personal information. Make sure that the company will notify you immediately of any problems.
Laura Ginn advises everyone to take the time to sit down and learn about each of the 0 interest credit cards you are considering. Call the companies offering the cards and ask them these questions, and any other questions that you have. Do not hastily rush into a new credit card simply because of flashy-brochure promises.