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Credit Card Balances Transfers Part 2After you have read, understand, and are comfortable with the terms being offered to you, then you must complete the balance transfer form carefully.
If you fill out the form wrong, or leave any part uncompleted, this can halt or delay a balance transfer. You should also make the minimum payment on your old credit card while waiting for the balance transfer to take effect so that you do not accrue any added late fees or penalty rates/fees or cause a delinquent note to be entered on your credit report. The balance transfer can take anywhere from two to four weeks. Your new credit card company may send a notice stating that the balance transfer has been completed, however, you must make sure that you are notified by your old card company that this has happened. To protect yourself, you need to document the name of the person you spoke with, as well as the date, time, and if possible that persons extension number and what was said. Experts strongly suggest for you to wait until after your old credit card company has sent a billing statement with a zero balance. If you do not receive one, then you need to request one sent to you. Your next step is to cancel the old card to avoid the temptation of an open credit line and having too many open lines of credit can lower your credit score and affect your ability to qualify for a mortgage or a car loan. The reason for this is that lenders view open credit lines as potential outstanding debt, even if the card carries a zero balance. Experts strongly suggest that the consumer pay down as much of the transferred balance as possible before the introductory rate expires. Sadly, too may people view the lower rate and lower payment as a sign that they can charge even more to their card. According to Consumer Credit Counseling Service in Atlanta, Georgia, too many consumers fall into this trap only to discover that they get slammed with higher
interest rates and payments six months later. This occurs because
they've increased the balance owed on the new card so that by the time the introductory rate expires they find themselves even more in debt with a higher minimum monthly payment then they originally had with their old card. In addition, if the consumer does not read the find print, they may be surprised that the lower rate only applies to the balance transferred and not to any new purchases. Many banks at first will apply payments to the lower rate balance, allowing you to increase your amount of higher interest rate debt, which allows card issuers to maximize the interest they collect. For example if an individual transfers a $2,000 balance to a new card with 3.9% balance transfers and a 17% APR for new purchases. If the consumer then charges $45 to the card, the entire $2,000 has to be paid before any payment is applied to that $45 charge, which means that $45 charge will keep increasing every month that the consumer has not paid off the original $2,000. You also
don't want to jump from one card to another with a low
interest rate. You need to find one card and stick with it in order to establish good credit. Most experts agree that you need to stay with a credit card company at least one year. By constantly transferring your balance, you are actually damaging your credit score because you're not building a stable credit history. In addition to making your payments on time and not going over your limit, you also have to maintain your entire credit profile in order to hold on to many low rates being offered by credit card companies. An example of this is an offer from Capital One. Who reserves the right to change the terms of the account if and when the Capital One account falls out of good standing or if the consumer fails to maintain a good standing with other credit accounts as well as an excellent performance rating with the credit bureaus. Therefore, if the credit card company finds a blemish on your credit profile, they have the right to raise your
interest rate, and many will. In addition, if the blemish is not your fault and is in fact incorrect and you dispute it and have the blemish
removed the credit card company may or may not reinstate your lower rate. Many credit card companies are searching for any excuse to charge you a higher rate, as this is how they make their money. If you for any reason do not maintain perfect credit, they will take advantage of you, after all this is how they make their money.
Back to Part 1 - Avoiding the Headache of Credit Card Balances Transfers , Bad To Good Credit Fix.com |
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