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Choosing and Using Credit Cards

Choosing and Using Credit Cards

Chances are you have received offers in the mail asking if you would like to open credit card accounts. Frequently, these offers say that you have been “pre-approved” for the card, with a line of credit already set aside for your use. Typically, these offers urge you to accept quickly, “before the offer expires.” However, before accepting a credit card offer, understand the card’s credit terms and compare costs of similar cards to get the features and terms you want.

Credit card offers may seem attractive, but remember a credit card is a form of borrowing that usually involves a “finance charge” — a charge for the convenience of borrowing — and often other charges as well.

Balance Transfer Credit Cards

How to Transfer a Credit Card Balance

By Lucy Lazarony for

Is high-interest credit card debt weighing you down? Consider a balance transfer.

By transferring your balance to a card with a low interest rate, you’ll get a nice reprieve from the heavy finance charges you’ve been paying.

With such super-low finance charges, more of each payment gets applied to your outstanding balance so you can make some real headway in paying down your debt.

How good are the deals? Some credit card issuers are offering balance transfer offers as low as zero percent for as long as one year.

To make the most of a balance transfer offer, you’ll need to make a few savvy moves. To maximize your savings, minimize fees, and avoid costly mistakes, be sure to follow these tips:

Shop around. You can find balance transfer offers in your mailbox and online. There’s a roundup of credit card deals here on Also, don’t forget to call your current credit card issuers and ask what kind of deals they have available.

Study each offer carefully. Make note of the introductory or teaser rate charged on the balance transfer, the length of the offer, and the interest rate that will be applied to your balance once the introductory rate ends. Be sure to ask about the interest rate charged for any purchases made during the introductory period. Some credit cards will offer a zero-percent or rock-bottom interest rate on balance transfers and new purchases for the introductory period — but many do not, so shop carefully.

Watch out for fees. Many balance transfer offers come with fees, sometimes as high as 3 percent of the amount transferred. Some issuers cap fees at $50 or $75, but others do not. In general, the bigger the balance you transfer between credit cards, the higher the transfer fee. If you transfer a balance of $3,000, you’d pay a fee of as much as $90. If you transfer a balance of $5,000, you could be charged a fee of as much as $150. When considering an offer, be sure to ask if a balance transfer fee can be waived or reduced. Some issuers will offer a break on fees, but you have to ask.

Move your debt. Once you’ve chosen a balance transfer offer, you’re ready to move your debt to the new card. You need to give your new card company the contact information and account details of the credit card balance you’d like to transfer. Before you can transfer a balance, your new card issuer will need the name and address of the other issuer, your account number, and the exact amount that you’d like transferred.

Keep paying on your old account. Because balance transfer offers can take up to three weeks to process, it’s important to keep paying on your other account. The last thing you need is to miss a payment and get zapped with a late fee. So continue to make the minimum payment on your old account until the amount of the balance transfer appears on your statement as a payment.

Avoid making new purchases. Once you’ve transferred a balance to a card with a low introductory rate, avoid making new purchases with the card. A balance transfer offer is a great opportunity to pay down debt. Loading the card down with new purchases will only throw you off track. Often the interest rate for new purchases is much higher than the interest rate on your balance transfer. And because many card issuers apply payments to balances with the lowest interest rate first, you may need to pay off most, if not all, of the balance transfer before you’ll be able to pay down any of the new purchases you made with the card.

Don’t miss a payment. That super-low teaser rate on a balance transfer could disappear if you pay your card bill late. Some issuers will raise your rate if you’re late with even one payment. Others will wait until you miss two payments before increasing your interest rate. With penalty interest rates of 24 percent and higher, a mistake or two can really cost you. So make it a priority to pay your bill on time each and every month. If your due date is fast approaching, consider paying online or by phone.

Automate your payments. Worried about paying late and losing that super-low rate on your balance transfer? Why not automate your payments? That way you’ll never be late. Many issuers offer this option when you enroll in online account access. Some issuers let you pick the payment amount that you’d like to pay each month. Others only give you the choice of making the minimum payment or the payment in full each month. Pick a payment amount that fits your budget and stick with it. Don’t forget to write the payment amount in your check register.

Pay off your balance before the low rate expires. The best way to maximize the savings of a low-rate balance transfer offer is to pay your balance in full before the introductory rate ends. When interest rates are next to nothing, more of each and every payment that you make gets applied to your outstanding balance. This is great chance to pay down your credit card debt. So make the most of this opportunity and pay down all the debt that you can before the introductory period rate ends. Your wallet will thank you.

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