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Avoid These Credit Card Balance-Transfer Mistakes

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That offer you get in the mail to transfer your high-interest credit card debt to a card with a 0% introductory rate could cost you more than the original card. To avoid problems…

Carefully compare different 0% cards. To figure out how much money you’ll ­really save, you must look well beyond the 0% rate to the many small-print details of the offer, including…

Balance transfer fee. This can range from 0% to 5% of the amount of debt transferred. Three percent—or $300 for each $10,000 transferred—is typical. Whatever the amount, it will be added to your debt balance upon transfer.

The length of the 0% introductory period. This generally ranges from six months to 21 months. The shorter the period, the sooner your transferred debt will be ­subject to a higher rate.

The card’s regular annual percentage rate (APR). If you still carry a balance once the introductory period ends, this is the interest rate you will start having to pay on it. The rate is high, typically about 20%. Note: If you put any new charges on the card and don’t pay them off in full by the monthly due date, the 0% introductory rate usually doesn’t apply. You pay the regular interest rate on new purchases unless the card has a 0% rate on new purchases, which some do.

Helpful: Once you find out all the terms in balance-transfer offers, use this free online calculator to find out which is the best deal­—Creditcards.com/­calculators/balance-transfer.php.

Set up a system so that you’re never late on a payment. Use calendar reminders on your computer or smartphone, or set up automatic payments. If you are late with a payment, not only can you get hit with a late fee but many ­balance-transfer offers give the issuer the right to end the 0% introductory period.

Avoid closing your old credit card account even if it has a zero balance. Closing it could hurt your credit score by reducing the amount of total credit you have available compared with the amount you are using.

Balance-transfer cards with attractive terms and no annual fee…

Chase Slate. There is no balance-transfer fee, and you get 15 months of 0% financing on both the balance-­transfer amount and new purchases.

Citi Simplicity. Although there is a 3% balance-transfer fee with this card, you get 21 months of 0% financing on balance transfers, the longest period offered by any card issuer. New purchases are charged at the regular interest rate, which varies from person to person based on your credit profile.

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Source: John Ulzheimer, president of The Ulzheimer Group, a consulting firm that specializes in credit reporting and scoring, Atlanta. JohnUlzheimer.com Date: July 1, 2017 Publication: Bottom Line Personal
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