Balance Transfer Points To Consider

Everyone will have seen something like this advertised for credit card balances transfers, which can seem like a great way to consolidate debt.

* No annual fees*
* Low fixed rate at 9%*
* Buy now, pay nothing for 2 years*

That got me thinking: what’s in an asterisk? That little dot at the end meaning conditions apply? So I had a look at a couple of terms and conditions and I’ve listed some. Debt Consolidation with a balance transfer may be a good idea but! you do need to read the fine print.

• The 0% p.a. interest rate applies to balance transfers with this offer for a period of 12 months. Transferred balances are repaid first. At the end of the balance transfer offer period your interest rate will revert to 20.99% p.a.

I highlighted the important bit, “transfered balance repaid first”. So if you put any new purchases on your credit card it will accrue interest and you can’t repay it until either you’ve repaid the balance transfered or the interest free period ends. So if you put $1000 on your credit card that will be $1200 at the end of the year unless you’ve repaid the initial balance transferred plus the $1000.

• Balance Transfers will not be accepted from personal loans, overdrafts, or business,

So not such a good option if you’ve got a personal loan or any other type of debt apart from a credit card. Maybe not such a good option for debt consolidation unless all you’ve got is credit cards

• Not available when you transfer from an existing BANK X credit card.

OK, so you’ve also got to find a bank that you don’t have a credit card with, in order to consolidate your multiple cards. This is getting trickier.

• * There is a 1% Balance Transfer handling fee

1% what the? That’s $500.00 on a $50,000.00 transfer.

I’m not saying don’t do it; just READ THE FINE PRINT.