Balance Transfer Credit Cards and Sensible things to Know
There are important things, concepts, and a way of thinking about balance transfers. Knowing and understanding these simple ideas may help you save more money.
You cannot transfer balances from any other accounts issued by the company that issues the credit card to which your balances are transferred, or any of its affiliates. Both companies need to differ from one another. You cannot use balance transfers to pay off or pay down any account issued by the same company or its affiliates. Depending on balances that are transferred, the restrictions of your choices of available credit cards may vary.
Think about credit line. The total amount that is transferred (including any balance transfer fee), must be less than your available credit line. If you go over the credit line, you have to pay over limit fee, and introductory period may terminate, and default APR may be triggered.
If you transfer the amount of any disputed purchase or other charge to your account, you may lose certain dispute rights. The introductory periods on balance transfers of some credit cards are the first 6 or 12 billing cycles following the opening of your account. The period begins after your account is opened, regardless of whether or not you transfer balances. If you transfer balances with these cards, the sooner, the better.
If one credit card account has balances with different APRs, payments are applied to balance with the lowest APR first. You cannot pay down or pay off balances with higher APRs until balances with lower APRs have been paid off. For example, if you carry a 0% APR transferred balance, and then you make purchases or cash advances that have higher APRs with the same credit card, while you pay down and pay off lower APR transferred balance, higher APR balances are accumulating interest charges at higher APR.
Furthermore, if you get 0% introductory APR on balance transfers for the first 12 billing cycles following the opening of your account and 0% introductory APR on purchases for the first 6 billing cycles following the opening of your account with a new credit card, and then you make 0% APR balance transfers and purchases (because you thought introductory APR on purchases was 0% and you could get cash back). Moreover, six months has passed after your account was opened and your introductory period on purchases expired, at this moment if you carry the balance for purchases, its APR surge from 0% to standard APR for purchases. And at this moment, if you still carry 0% APR transferred balance, while you pay down and pay off it, the balance for purchases are accumulating interest charges at standard APR for purchases.
Therefore, to maximize the financial benefits of 0% introductory APR, it is very important to think about the concepts of Purchase APR, Balance Transfer APR, Cash Advances APR, Introductory APR, Promotional APR, Standard APR, Default APR, Fixed APR, Variable APR, difference of APRs, introductory period, difference of introductory period, these balances, transfer fee, credit limit, cash back rate, and payment allocation.
In addition, this applies when you make balance transfers. That is, if you carry balances with different APRs in one account and intend to transfer only higher APRs ones, this is not possible because of this payment allocation. In order to transfer higher interest rates balances, you need to pay off or transfer off lower interest rates ones. Moreover, if you carry high interest balances in each different accounts, and intend to transfer them, and the total amount of total balances of these accounts, including any transfer fee, is more than your available credit line, you need to think about payment allocation of each account, fees, and so on in order to save more money.