Balance Transfer Pitfalls That You Might Fall Into Part I

Transferring your balance from a high-interest credit card to another one that offers better interest rates can save you thousands of dollars over the lifetime of the money you owe.  Plenty of cards offer really low rates with some even giving you a zero-percent rate on balance transfers.  While doing a balance transfer is usually good, it can cause a bit of trouble if you don’t take careful watch of you’re getting into.

Some Credit Cards Have A Time Limit On Balance Transfer Interest Rates

Most cards only offer the low or zero interest on the transferred amount for a certain time, like six months to a year.  If part of the balance remains after the set period, you’re going to end up paying interest in full.  If the updated rate will be lower or the same as your current credit card, it may be okay.  If it’s considerably higher though, you might want to give it some more thought.

Using The New Credit Card For New Purchases

Majority of cards will give you the low interest rates for the transferred balance only while charging even higher rates for new charges to the card.  Not a problem, right?  It’s still a good deal that allows you a lot of savings for the current balance you’ve incurred with your current credit card.

When you transfer a large balance onto a new card, however, using it to make new purchases can lead to very high interest payments later on.  Any payments you make to the new credit card will usually be charged to the old balance, which means all your recent purchases will continually pile up interest until the transferred amount is cleared.  That can mean a considerable amount of interest payments tack on that you’ll be forking up money for in the long run.