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Five Not So Obvious Questions To Ask About A Balance Transfer

One sign that the New Year is here is that credit card balance transfer offers may be filling your mailbox or inbox. Some credit card companies may offer a low promotional rate when you transfer a balance from another credit card, others may be offering you zero percent for a predetermined time frame. Should you go for it? Is it a good promotion? Start by asking yourself these five questions:  

  1. Can I pay off the transferred amount before the promotional period ends? For examples, if you're thinking of transferring a $3,000 balance to take advantage of a 0% interest offer that ends in six months, can you really afford payments of $500 a month? If not, take a closer look into what happens after the promotional rate ends.
  2. If I make a late payment during the promotional period, will I lose the special rate? The answer is usually yes. Many credit card companies will revert to the regular annual percentage rate (APR), which means you could potentially lose the benefit of transferring you balance.
  3. What will the rate become when the promo period is over? Watch out for "deferred interest" offers phrased like this: "No interest if paid in fully by [DATE}." If the balance isn't paid off by that date, you could retroactively be charged a higher interest rate on it.
  4. Is there a balance transfer fee? Many companies often charge a balance transfer fee which is usually around 3% of the amount transferred. For a balance of $3,000, for example, that could be as much as $90. Paying this fee makes sense only if not making the transfer will cost you more in interest. You can also avoid having to determine if it's worth it by choosing an offer without a transfer fee.
  5. How are new purchases treated? Some credit card companies will offer 0% APR on balance transfers, but not on new purchases made within the promotion period. If you plan to use this card regularly, double-check the APR on new purchases as well.

If you're interested in learning more about transferring your credit card balance, take a look at Vermont Federal's Visa®  Platinum Credit Cards. We offer great rates year-round with no balance transfer fees and rates that don't go up if you have a late payment. Learn more about our 2.00% APR*** balance transfer for 6 months.

 

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