Credit Card Balance Transfers: Important Factors to Consider

If you’re someone who is planning to make a big purchase in the near future and you want to use one of your credit cards to do it, a credit card balance transfer may seem like a really great option. After all, it’s an effective way to provide you with the room that you need to pay off certain bills. However, before you rush into making this kind of decision, it’s a good idea to consider a variety of factors.

Check out these five things that you should ponder before applying for a credit card balance transfer below:

Be clear about the promotional period. There are some companies that will offer you a balance transfer for zero percent interest. While that does seem really appealing at first, the thing that you need to keep in mind is that oftentimes it’s a limited time promotional deal. So, before going with a particular offer, find out how long it lasts. That way, there will be no unpleasant surprises up the road.

Read up on the transfer fees. There aren’t a lot of companies that are going to offer you a balance transfer without charging some kind of fee although some are much higher than others. This is the reason why it’s always a good idea to read the fine print to make sure that you are aware of what it will cost you to initialize the transfer before actually doing it.

They usually come with new credit limits. One surprise that many credit card users do not anticipate is the fact that many companies will not share what the new credit limit for the new card is until the application has been processed. The challenge with that is sometimes you will end up with a new card that has a lower credit limit than you were anticipating.

There could be an impact on your credit score. Sometimes the assumption is made that by transferring the balance over to a new card, the old card’s account will be closed without any repercussions. However, the reality is that if you’re doing a credit card transfer in order to reduce some of your credit card debt , you should be prepared for the fact that closing out your initial card could end up having an impact on your credit score. That’s because if it is a high-interest card, it will ultimately reduce your credit utilization score; that is something that helps to calculate your score. That’s why you might want to keep the initial account open, just so that you can continue keeping the credit line available.

You need to have a lot of self-control. Being that most people transfer balances in order to get more credit on a particular card, it’s essential that you exhibit a significant amount of self-control as it directly relates to choosing credit cards and your spending habits. Just because you have more credit available, it shouldn’t be treated as if you have “free money”. Each charge comes with interest and over time, that can pile up. Credit cards are always something that you should be used responsibly. For information on how to use your credit cards wisely, visit Fidelity and put “using credit cards wisely” in the search field.