Five Credit Card Balance Transfer Mistakes To Avoid

Lenders often make multiple offers to credit card holders for credit card balance transfers. Initially, the offers appear to be an excellent method to save money. Stop and think for a moment. Lenders must make money from these offers to remain in business. There are five credit card balance transfer mistakes to avoid. Learn these pitfalls to filter out the good lending offers from the bad ones.

Avoid Transfer Fees

Good lending offers do not require a transfer fee. Some companies require a credit card balance transfer fee that is a flat rate. Others calculate the fee based upon the account balance. Either way, the borrower loses money and the lender profits. Avoid lending offers that require a transfer fee of any type.

Interest Rate on New Purchases

Another type of fee lenders make money from is from the interest rate on new purchases. A special often offered is no interest for 30 to 90 days. The special, however, does not apply to new purchases made. It applies only to the existing balance at the time of the credit card balance transfer. The offers with interest in new transactions can be costly if you plan on making new purchases.

Higher Interest Rates

Another method the lenders make a profit from credit card balance transfers is significantly higher interest rates. Examine the interest rate amount that begins after the special offer ends. If the amount is higher than the current interest rate, avoid taking the offer. The amount paid in interest accumulates over time. This, in turn, costs the consumer a great deal of money.

Late Payment Fees

Consumers suffer a loss with late payment fees. Often, lenders advertise a grace period with no charges for late payments. After the grace period ends, the late payment fees can be extremely high and costly. Always make payments in a timely manner to avoid losing money through late payment fees.


Late payment fees are not the only method that lenders make additional money with credit card balance transfers. It may surprise consumers to learn some companies actually charge a penalty for paying-off the account early. Other companies will not apply the extra payment to the account balance. The additional payment goes toward the interest owed, instead of the principal. Avoid conducting business with lenders that penalize for early pay-off or do not allow payment toward the initial principal. Consumers lose money while lenders make a large profit.

Smart Choices

Participating in credit card balance transfers is a smart financial method to reduce debt and consolidate credit card balances. The key is to make certain to read all of the fine print of the contracts before accepting lender offers. Avoid contracts that include transfer fees, interest on new purchases, high interest rates after the grace period and early pay-off penalties.