Common Mistakes in Using 0 Balance Transfer Credit Cards

By Leni Parrish on August 28, 2009

A lot of people quickly make the switch to a balance transfer credit card without giving it much thought. But did you know that the wrong choice and the incorrect use of 0 balance transfer credit cards can lead to worse debt problems? Let us talk about the most common mistakes people commit when using 0 interest credit cards.
Not checking the terms and conditions

Don’t be too excited about the promise of 0% APR. Opening a new account is a serious decision that should be made with caution. You don’t want to be stuck with a card that has an even higher APR than your current one just because you did not check the regular rate and the introductory period.

Also, bear in mind that 0 balance transfer credit cards only accept applicants with good credit history. If you have a low credit score, your application will most likely be declined and such a rejection can only do more damage to your credit rating. If you have poor credit history, it’s best to find other possible solutions to eliminate your debts.

Transferring all balances to your new card

Some people with multiple cards think that the best way to benefit from the 0 interest offer is to move all their charges to the new card. Take note that each time you transfer a balance, there will be a balance transfer charge. Therefore, analyze your accounts carefully and see which ones have the highest rates.

Your priority should be to eliminate your highest rate debts first so these are the balances you should transfer to your card. As soon as you’re done completing your payments, you can consider transferring the rest of your balances while the 0 interest still applies.
Using a balance transfer card for shopping

Yes, it may offer 0 interest rate for the balances you transferred but that doesn’t mean the rate also applies to purchases. Take note that credit card companies will make up for what they give by imposing high rates on new balances. This means if you use your card to buy that gorgeous dress or that iPod on sale, you will be charged with regular interest rate.

Therefore, balance transfer cards are best used mainly for paying off transferred balances. If you want to make a new purchase, consider using cash for payment rather than charging it to your credit account. Better yet, don’t buy the item unless you really need it. Smart spending within your means is still the best way to go.

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