In an effort to attract more business, the credit card companies send a lucrative offer to their prospective new customers – transfer your existing credit card balance with zero per cent rate of interest for a limited time. It’s a golden opportunity to come out of debt but there are some important tips to remember while transferring your balance to such new credit card account.
- There is no restriction on how many times you can do a balance transfer. It depends on the offers you actually get or find out. There is only one condition – your credit score must be sufficiently high to get such invitations.
- As there is no limit on the number of times you can accept such offers, you should be smart to click on a good timing. If you are already enjoying similar offer, you should look out for a new one at least six weeks before your existing offer expires. This minimum time is recommended for a smooth switch over.
- Some people are afraid of the possible damage to their credit score if they take such an offer. However, if you have multiple debts outstanding for a long time, it is going to hurt your credit score anyway. By accepting such offer you will get an opportunity to clear your debt without the burden of interest. This will in fact improve your credit score in the long run.
- You should never spend a single dollar on the credit card which you acquired on doing this balance transfer. The rate of interest on such ‘new’ purchases is usually very high. And the credit card companies will apply all your payment firstly towards your balance carrying zero per cent rate of interest. So you may start paying interest on your new purchases from the first month itself which can offset the benefits you got on the deal.
- Check carefully the transfer fee charged on this deal. Sometimes the fees charged on such transfer will be a percentage of the total balance transferred. If there is no upper limit on such fee, such amount may be too high.
- You should not look out for additional credit limits on this new card. Though the card issuer may be happy to provide you some credit limit, you are not going to use a single dollar out of it. As such, offers with extended zero interest period but low additional limits are the most attractive ones.
- Before applying for such offer, you should check your credit report thoroughly to find out whether there are any mistakes or adverse remarks in it. You may be rejected based on such inconsistencies in your credit report. Once rejected, it may be very difficult for you to get similar offer again.
- Usually such offers are made to all new customers. However, you should inquire with your present card issuer whether any such deal is available to the existing customers. This will reduce the risk of rejection considerably.
These offers look very attractive on the surface, but there may be hidden dangers inside. You should be cautious to get into such offer.