If you’re paying high credit card interest rates, it can seem like you pay and pay but it all goes to pay the interest and your balances never go down. This can cause a massive drain on your finances. If you’re in this situation, you might think it’s a good idea to consolidate credit card debt and reduce the amount of interest you’re paying to a more manageable number. It would seem a wise move to transfer balances from a credit card bearing an a annual percentage rate of 16 percent to another card bearing a lower rate, such as 13 percent. However, before making a move like this, be sure that there are no hidden fees that could come back to bite you. To do this, you’ll need to make sure you completely understand the fine print of your contract with the lower-rate card.
When you transfer balances form a high-rate card to a new, lower rate credit care, you may be required to pay a "balance transfer fee." Some companies compute this fee as a flat, one time fee of $39 or $49. Depending on the card, though, you may be surprised to find that the transfer fee is comptued as a percentage of the amount you’re transferring. These fees can sometimes run as high as four or five percent when you consolidate credit card debt in this way. If you’re transferring, say, $2500, a five percent fee would cost you $125. Worse yet, the balance transfer fee is immediately added to the outstanding balance on the new card, so if you don’t make a payment right away, you can end up paying interest on the fee itself.
You should also look out for other hidden fees when you consolidate credit card debt by transferring balances onto another card with a lower rate. For instance, some cards charge a telephone payment fee if you’re in the habing of making payments by phone.These phone payment fees often run as high as $10.00 per transaction. If your old card didn’t have a fee and your new card has one, you should be sure to switch your payment method to avoid having to pay this fee. The company that issues the new credit card should disclose any such fees before you actually make the payment, but if they don’t, you should be sure to ask.
These fees are "hidden" only in the sense that when you’re preparing to consolidate credit card debt, you may not have such fees in mind, and may not read the fine print. Credit card companies are required to disclose all fees before you take advantage of their offers. Make sure you read all the fine print, and understand any feels that you might have to pay before you actually make the move to a lower rate card.
Popularity: 19% [?]
Print This Post
Recent Comments