I remember one week a few years back where I got in the mail five offers for new credit cards. In one week. I’d been pre-approved and all I had to do was fill out the form. I could even do a balance transfer from cards I had with a higher interest rate. For a small percentage of the transfer (usually around 3-4%) I could get no interest on the transfer for like a year.
The idea being I would use the new card. Not pay off the balance on the transfer and in a year’s time you’d be paying the full interest on the transfer as well on the new purchases that you made.
I don’t receive as many of those offer through the mail these days. I do receive many balance transfer offers from the banks I have credit cards with now. I also get them in my e-mail. The best offer I got was from my credit union. It was a low interest rate until the transfer was paid off. I think it was about 3%. So I went ahead and moved some money.
When I do do a balance transfer, I look for the offer that has the longest time frame to pay it off and lowest fee on the transfer. There are cards that have 4% or 5% transfer fee on the balance which is way too much money. I’m looking for no higher than 3%.
Another consideration is the interest rate on the card once the no interest period has passed. I’m certainly not going to take an offer from a card where the interest rate is 24%. Now you may ask why would you possible have a card with that high of an interest. The card is from Sears. I used it to buy a new refrigerator when my old one broke. It was no interest if you paid off the refrigerator in a year. The important caveat was you had to pay off the whole balance or you’d be charged the full interest on the full price of the refrigerator not on the balance that was left. I made sure I paid if off well ahead of time.
That’s the important thing to remember. You have to make sure you pay off the balance transfer before the no interest period is over. Furthermore you should stop using that card to make additional purchases unless you pay them off in full each month. That way you beat the card companies at their own game.
Speaking of offers in general. Sears sends me emails in which they urge me to do a balance transfer from those higher interest rate cards. The transfer fee is at least 4% if not 5%. Why would I possible want to do that. I got an e-mail offer for a new credit card from Ebates the other. I looked at the offer and thought it sounded pretty good. You get the savings when going through Ebates to buy things from a particular merchant. Then you would also get a couple percent back for each purchase. I also think you’d get one percent back if you bought things in general. I clicked on the link for further information. I saw the interest rate and just as quickly closed the window. It was a whopping 24.99%. Unless you pay the whole thing off each month, this card is not even worth considering.
I guess the moral of the story is carefully read the fine print on all these offers. Once you do you realize very few are offers you need to accept.