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Small Business CardsSummary: The good, the bad, and the potentially ugly about credit card balance transfers. When it comes to credit cards it is easy to get in over your head, or at the very least outside of your comfort zone, when it comes to balances due and the high interest rates you're paying from month to month just to keep your credit in good standing.
Many consumers find that this is a very delicate balancing act that can sometimes feel like it is being done without a net and over shark infested waters. But, this doesn't have to be how your credit story goes. There are things you can do that will paint a much rosier picture for your credit score outlook. However, you're going to have to learn to avoid a few sizeable temptations along the way.
Avoid Costly Credit Card Balance Transfers Mistakes
Mistakes can really add up fast when it comes to credit card balance transfers. You'd be better served by avoiding them altogether. Below are some of the major mistakes you might want to avoid at all costs when it comes to your credit cards and any potential balance transfers you are considering.
| Interest Rate (p.a.) | Balance Transfer Rate (p.a.) | Annual Fee | Cash Advance Rate (p.a.) | |||
|---|---|---|---|---|---|---|
 Citibank Clear Platinum Card | A rare offer that gives you the benefits of a platinum credit card without the price tag. | 11.99% | 0% for 12 months with 3% handling fee | $99 | 21.74% |   |
 St.George Vertigo | A great balance transfer credit card with a low ongoing interest rate. | 13.24% | 0.99% for 6 months | $55 | 21.49% | |
 HSBC Credit Card | Take advantage of 0% for 6 months when you transfer your balance to HSBC Credit Card. | 17.99% | 0% for 8 months with 2% handling fee | $0 | 21.99% | |
 Bankwest Breeze MasterCard | Awarded Cheapest Credit Card 2010 by Money Magazine and features the lowest MasterCard interest rate in Australia. | 0% for 6 months (reverts to 10.99%) | 4.99% for 9 months | $49 | 21.99% | |
 Westpac Low Rate Card | Enjoy a low balance transfer rate and a low ongoing interest rate. Up to 55 days of interest-free shopping. | 1.9% for 9 months (reverts to 13.49%) | 3.99% for 6 months | $0 annual fee for the first year ($45 thereafter) | 21.49% | |
| Interest Rate (p.a.) | Balance Transfer Rate (p.a.) | Annual Fee | Cash Advance Rate (p.a.) | |||
|---|---|---|---|---|---|---|
HSBC Credit Card | Take advantage of 0% for 6 months when you transfer your balance to HSBC Credit Card. | 17.99% | 0% for 8 months with 2% handling fee | $0 | 21.99% | |
St.George Vertigo | A great balance transfer credit card with a low ongoing interest rate. | 13.24% | 0.99% for 6 months | $55 | 21.49% | |
 Westpac Earth Classic | Earn unlimited Qantas Frequent Flyer Points while enjoying a low rate on balance transfers. | 19.99% | 0.99% for 6 months | $75 | 21.49% | |
Westpac Low Rate Card | Looking for a low ongoing rate with great balance transfer deals? This is it. | 1.9% for 9 months (reverts to 13.49%) | 3.99% for 6 months | $0 annual fee for the first year ($45 thereafter) | 21.49% | |
| Interest Rate (p.a.) | Balance Transfer Rate (p.a.) | Annual Fee | Cash Advance Rate (p.a.) | |||
|---|---|---|---|---|---|---|
St.George Vertigo | A great balance transfer credit card with a low ongoing interest rate. | 13.24% | 0.99% for 6 months | $55 | 21.49% | |
Bankwest Breeze MasterCard | Enjoy one of the lowest interest rates in Australia with Bankwest Lite MasterCard. | 0% for 6 months (reverts to 10.99%) | 4.99% for 9 months | $49 | 21.99% | |
- Failure to follow through - People promise themselves all the time that they will transfer the balance from a high interest credit card to one with a low or zero percentage interest rate introductory offer on another card and pay off the balance before the introductory offer expires. This is a fantastic plan to follow to eliminate or greatly reduce your overall credit card debt and interest rate burden. Sadly, the temptation of the new credit card often leads to new purchases and double the interest rate trouble once the low rate period expires.
- Ignoring the fees - Lower interest rate cards are attractive at first glance. But once the heat of the moment has ended and you're facing the card in the harsh light of day you realize that those nasty annual fees and unattractive terms make the card much less appealing. It's a good idea to examine the offer fully before you get in a committed relationship that is going to be one-sided at best.
- Failing to get the facts - The facts of the offer are vital clues that will help you decide if an offer is good. More important than just getting the facts though is allowing for some time to understand your responsibilities. You should never make long-term financial decisions on a whim or in a high-pressure situation. If you are faced with a "now or never" kind of offer it is best to leave it on the table. Usually these are meant to pressure you into a situation you don't want to be in. Pay attention to the expiration date of the introductory offer; the terms, annual fees, and other relevant information that could effect just how nice this offer ultimately is.
Only Consider Credit Card Balance Transfers that Truly Benefit You
There are all kinds of credit card balance transfers deals out there. Not all of them are designed to benefit you in the long-term. In fact, most of them are designed to benefit the credit card companies and are disguised as potentially beneficial to you. Make sure you read the fine print about what the offer entails:
- What is the interest rate during the introductory offer?
- What will it be once the offer ends?
- How long does the introductory period last?
- Are there any limitations on the funds covered by the low interest rate offer?
Always read the fine print and make sure you understand the terms of the deal. Ask the following questions before you leap into a balance transfer deal with a credit card that might prove to become extremely costly to you.
- Are there fees for transferring balances?
Also called a "handling fee" these costs are often associated with balance transfers. Be sure to ask and understand how high the fees are in relation to your transfer balance. - Will you be able to commit to paying off the debt before accruing new debt on the card?
Most balance transfer cards work by paying off the existing debts first. This means that your balance transfer needs to be paid off before you start charging new items to your card. You could end up paying the full interest rate in addition to any relevant fees associated with the transfer unless you stick to the plan and pay off your highest debt first. - How long does the balance transfer window remain open?
Most introductory rates only allow balance transfers during a certain period of time. Some may extend the offer for three months while others only allow one month. Also keep in mind that you will likely need time to repay the amount owed if you're hoping to payoff the entire debt before the introductory interest rate expires. This means that time is off the essence, and the sooner you transfer the balance the better it will be.
The Beauty of Credit Card Balance Transfers
The truth of the matter is that credit card balance transfers, when used properly can be highly effective tools for assisting you in reducing or eliminating credit card debt altogether. Learning to avoid the mistakes and potential pitfalls can be your first step in the right direction. Don't avoid the possible benefits of offers like this out of fear but instead become an educated consumer so you can make the best deal possible for your individual credit situation.
There is no one size fits all solution for credit card problems. However, when done well, credit cards balance transfers can give a lot of people the breathing room they need in order to make it to the light on the other side of the credit card debt tunnel.
