Surprising Terms In Balance Transfers Increase Consumer Risks
A lot of consumers, after going on a spree with their credit cards during the holiday season are now probably trying to figure out how to handle the resulting credit card debt that they incurred.
One popular way of handling credit card debt which has gained a lot of popularity among credit card holders is to transfer debt around from credit card to credit card. This used to be a very lucrative way to take care of credit card debts, especially during the heyday of credit cards when a lot of the major credit card companies offered 0% balance transfers with attractive, interest free offers for a number of months.
Now that the economy has become risky and credit card companies are getting significantly more conservative than they were before, those 0% interest rate balance transfers are quickly becoming a thing of the past.
Nowadays, credit card holders risk financial disaster if they make uninformed, spontaneous decisions about making balance transfers. A few surprising term changes await card holders who want to transfer their existing credit card balance to a new card. A lot of the attractive balance transfer deals being offered to card holders now usually carry a few hidden terms which could make for an unpleasant surprise for them.
For instance, a lot of credit card companies have already hiked their balance transfer fees and credit card holders would be hard put to find low or 0% balance transfer fee offers nowadays. Balance transfer fees now average at 3% to 5% of the balance transferred. The rates are somewhat negotiable but only for those with excellent credit ratings.
Another thing that credit card holders should watch out for is that balance transfer fees now no longer have caps. Back them, balance transfer fees were limited to around $100. Now, balance transfer fees can virtually go as high as credit card companies want them to. At times, it would be less financially damaging to just pay off the balance instead of paying the balance transfer fees.
In general, the low introductory rates on balance transfers – including the rare 0% rate – usually lasts anywhere from 6 to 9 months. That’s about half the amount of time that used to be offered just a year ago. Card holders need to be aware of when the default rate begins to be charged to them so that they don’t get nasty surprised in the mail. There is also the risk of triggering the default rate if card holders make the mistake of being delinquent in their payments. This is something that card holders who are regularly late in paying their credit card bills should seriously consider before jumping into a balance transfer deal.
