Transferring To A Low Interest Credit Card

Transferring to a low interest credit card can help save you money because the interest rates on transfers are typically low. Your credit card payments will be reduced and you can end up paying off your debt faster. If you are not careful, however, you may wind up losing money in the long run.

Understanding Low Interest Credit Cards

Low interest credit cards are issued by banking institutions. They have low introductory rates that typically range anywhere from 0% to .33%. Depending on the bank, the rates will remain in place anywhere from six to twelve months. After the introductory period ends, the rates go up to anywhere from 6.5% to 15.99%. Be sure to check your loan terms and pay careful attention to the introductory period. Try to pay off as much of your loan as possible during this time to avoid costly interest charges.

Payments can be divided into two types payments: fixed and variable APRs, or annual percentage rate. With fixed rates, the interest rate will remain unchanged over the life of the loan. The interest rate can be changed if the provider decides to change your rates for nonpayment or recent lates, but you should be notified in advance if the lender intends to increase your rate. With adjustable rates, the interest rate will fluctuate, according to market conditions.

Things to Watch Out For

If your credit score drops, your interest rate may increase. Be careful to read the fine print about credit scores and how often rate changes are assessed with the card offer.

Also, be careful that your introductory period is not terminated earlier than the agreement stipulated because you will end up paying higher rates. Sometimes the lender will make processing errors that may cause your rate to increase.

Carefully review your paperwork and pay close attention to the fees that are assessed with the card.

Transferring Credit Card Balance

In order to transfer your credit card balance, you will be required to officially accept the new credit card and complete a balance transfer form. On average, the transfer can take anywhere from two to four weeks so be sure to keep up with the payments on your old card. Failing to make your payments on time may give the new lender cause to increase your introductory period rates.

Also, keep in mind that the bank you are transferring your funds to will charge you a transfer fee. Depending on the bank, they can be as high as four percent (which amounts to 25% of your balance). The more money you transfer, the higher your fees will be. If the fees are higher then four percent, it's usually a sign that the transfer may not be worth the trouble.