As part of my credit card debt elimination plan, I mentioned I was going to look into 0% balance transfer options, in order to reduce the amount of interest I am paying and help speed up the payoff process. Well, shortly thereafter, low and behold, I found a Citibank Citi CashReturns card 0% transfer offer in my mailbox (surprise, surprise- I get about 1 cc offer per day these days). Well, after a few days of deliberating (Do I really want to sign up for another card?) I signed up, and I got 12 months at 0% on my transfers, so I transferred about $9,000. If I spend $100 on the card by the end of September, I get an additional 3 months at 0% as well.
So what should you look for when transferring a balance?
What to look for:
Credit Card Terms
- How long is the offer for? 6 months, 9 months, 1 year?
- What is the Annual Percentage Rate (APR)? The current rate for purchases is 10.99%, but I don’t really plan on making any. If you get a card to use for a balance transfer, the APR may be on the high side for purchases.
Transfer Fees
- How much are you charged to transfer the balance? 2%, 3%? You need to subtract this from the amount you anticipate you will save by lowering your interest rate. The transfer rate on the Citi CashReturns card is 3%, so it was about $270. I did get $15.00 cash back. Even after the transfer fees, I will save about $600-$700+ in interest payments if I pay the card off in 9-12 months.
Conditions
- What is the default APR? This is the APR you will pay if you are late on your payments. Don’t be late! The rate on the Citi card is 23.99%, so I plan on scheduling my payments in advance to be extra careful that I am never late.
Before making a balance transfer, you need to investigate how long the offer is for, what the APR is, and what the fees may be, if any. You then need to run the numbers to see if it is a good deal and worth doing. Then pay that debt off!
Check out this list of credit cards with low introductory rates!
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Double 08.09.08 at 10:31 am
Great tips of credit card transfer cards, credit terms, transfer fees and conditions. A topic I did not know much about as I never took the time to investigate asI always pay my balance when due.
RC 08.09.08 at 9:54 pm
@Double- Thanks! Paying off your balance is a good thing, I wish I had done that more in the past!
eduardo 11.08.08 at 5:49 pm
I was told that it is possible to use balance transfer to a checking or savings account instead of to another credit card.
can someone tell me if this is true and which credit cards accept this
practice.
I called amex cc and they say that they would consider this a cash advance, of course I did not apply since I was looking for 0 % balance transfer.