If you get a really terrific balance transfer offer, beware. First off, go for the balance transfer offers that are until you pay off the card completely rather than the ones that are for only six months.
Make sure the credit card that offers a discounted balance transfer rate has zero balance on it BEFORE you balance transfer into the card. If you already have a balance on the credit card that is also offering you a balance transfer at a great rate your monthly payment will only go towards the balance transfer and your higher interest debt won't be touched! Only when you have paid off the lower interest balance transfer will the higher interest debt begin to be erased. The problem with this is that the higher interest debt keeps revolving and increasing without any payments going towards it to pay it down while the balance transfer money is being paid down, yech!
Once you do the balance transfer, DON'T EVER BE LATE WITH A PAYMENT, DON'T EVEN CUT IT CLOSE. Send your payment in 10 days before! If you're late just once, they can instantly raise your special balance transfer offer to 20% or MORE!
DON'T USE THE CARD ANYMORE! That's right, once you do a balance transfer to take advantage of a low interest rate until the card is paid off, DO NOT UNDER ANY CIRCUMSTANCE use that card UNTIL your balance is ZERO! Any new purchases you make will again be hidden behind the balance transfer money you owe and your monthly payments will not touch the higher rate purchases you make as long as you owe on the balance transfer.
Even a semi-low interest balance transfer rate of 6.99 - 7.99 STILL EQUALS an interest rate of between 20-25% if you only make the minimum payment!
So you can see as you creep up on the interest rate but only make minimum payments how futile it can become to pay off a credit card. I find that 5.99 is when the interest is somewhat reasonable even if you only make a minimimum payment.
4.99 is good.
3.99 and 2.99 are fantastic because when you make the minimum only about 10% of the payment is going towards interest. Isn't that interesting, even a 2.99 or 3.99 interest rate STILL equals a 10% rate if you only pay the minimum due!
To calculate what your actual interest rate is divide your monthly interest finance charge by your total monthly payment and that is the real interest rate you are paying.
In general, paying the minium amount due usually means your true interest rate will be a minimum of 20% and can go as high as 50% or more!
<font color="#a62a2a" size="1">[ February 25, 2006 01:43 PM: Message edited by: Alex ]</font>
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