You have seen them, everybody has. You open
your credit card bill and there it is. A blank check with your name on it, for
you to use in any way you want. Best of all, there is a low interest rate…0%… a
limited time. Sometimes for as long as six months or more. It looks too good to
be true. As is the case most times, when something looks to good to be true, it
usually is.
Credit card companies routinely send these magic checks out to
people with low balances or who limit credit card use. After all, a credit card
that isn’t being used isn’t doing much for the bank’s bottom line. So they make
these offers in the hope that their customer will transfer high-interest
balances, take advantage of low interest for that vacation they have been
passing by, or get more air miles just in case. While these are all valid
reasons, this plan has some pitfalls that many or most people find themselves
falling into. Here are some things to remember before you take advantage of
these offers.
LOOK OUT FOR
THE FEES
There
is often a transaction fee for balance transfers, often as high as 3%. This
term is hidden in the fine print. Be careful. That transfer of $3,000 at zero
interest just cost you a cool ninety bucks.
CAN YOU PAY
IT OFF IN TIME
The
low monthly interest is a good idea if you can pay off the amount within the
time limit of the offer. It’s a good idea to save on interest. But remember
that after the six months, interest goes up to the regular interest rate.
Ensure that the interest rate is not higher than the rate on your other cards.
DON’T BE LATE
If
you are late with your payments –even for a day– the special rate reverts to
your actual interest rate. Credit card companies that appreciate your business
raise your interest rate to a default rate, typically over 29%, as a token of
appreciation.
DON’T DOUBLE
DOWN
Remember,
if you pay to transfer a balance or use these checks to pay off another credit
card, that card now has a zero or low ratio. While your intentions may be good,
the temptation to use that card is excellent. Most people will use it.
Cautiously at first. Just to buy gas. Maybe to go out to dinner a couple of
times. Then they get an email about a great deal on a plasma TV, and before
they know it, the six months have gone by, and both cards are at the maximum.
DON’T USE
THEM
If
you are not sure you will be able to make timely payments and control your
other debt, the best thing to do is avoid the temptation to take advantage of
these offers. If you fail to use the checks in the allotted time, don’t worry.
You will get more in your following statement. Don’t use them if you don’t need
them or if it doesn’t make sense to use them.
Read More: https://www.creditrepairease.com/blog/cash-advance-balance-transfer-checks-all-you-need-to-know/
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