Having credit card debt can be quite an overwhelming experience for most people, especially if it involves a large amount of money. That is why opening a new credit card with a zero percent interest rate is quite enticing to many people. With all the advantages that these cards provide, there may be a downside to it if you are not careful about how you handle the whole credit card balance transfer process. Here are some of the common mistakes people make when making credit card balance transfers.
Not finding the best offer
Various credit card companies offer interest free promotional financing. These offers usually vary from one credit card company to another. When you are looking to make a credit card balance transfer, it is imperative that you first take your time to shop around and find a card company that will give you the best deal possible. Don’t just go for the first card company that you come across. For instance, while most credit card companies offer a zero interest rate for the first six months, there are some companies that will offer a zero interest rate for up to 18 months. So do your homework first and shop around before selecting which card company to sign up with.
Not having a plan
You need to have a strategy on how you are going to pay off all your debt before the zero interest rate period elapses. It is easy to get all excited about your new card, but if you do not have a plan on how you will pay off all your credit card balance, you may still find yourself in debt by the time the zero rate interest period comes to an end. So before signing up for a new card, figure out how you will repay the entire amount owed.
Not reading the terms and conditions carefully
You must know what you are getting yourself into. Before you sign up for a new card, you need to read the fine print and familiarize yourself with the terms and conditions of using the card. This will minimize chances of you getting nasty surprises in future when something comes up.
Getting rid of the old card too soon
First ensure that all the debt on your old card has been paid off by the new credit card company that you are switching to before you stop making payments to the old card. This is because the process of the new card company that you have signed up with paying off all your debt may take a couple of days or weeks. If you stop making payments on your card too soon, before your debt has been cleared, you will incur late fees and penalties. This will further add up your debt.
Overlooking the cost of transfer
Do the math and understand how much it will cost you to make the transfer. In some cases, it may be better for you to pay down the debt within a few months than to transfer it to a new card. This is due to the transfer fees charged by the credit card company.