Despite the many benefits of using a balance transfer credit card as a means of eliminating debt, many fears still remain among consumers who are examining all their options.
As with any financial decision, you don’t want to travel down this path until you first compare all the pros and cons. This is the best way to get a clear idea of what a balance transfer credit card has to offer, as well as any areas of concern.
With this in mind, let’s look over three of the top fears associated with using a balance transfer credit card:
- A high balance transfer fee. When you transfer a balance to this type of card, you will be charged what is known as a “balance transfer fee.” Generally speaking, this is somewhere in the one to three percent range of the balance. While you may not want to pay this fee, it’s the price of doing business. By comparing this fee to your savings over the long term, you can easily determine if it’s a good idea.
- The inability to payoff your debt before the zero percent introductory rate expires. You only have so many months, typically 12 to 18, until your zero percent rate turns into something much higher. Your goal is simple: to eliminate your balance before this happens, as to once again avoid paying interest.
- The temptation to use the credit card while you’re paying down your debt. While there’s no rule saying you can’t use your card for new purchases, this will make it much more difficult to eliminate your balance in a timely manner. Do you have the self control to avoid this?
As you can see, there are definitely some fears associated with using a balance transfer credit card. Here’s the good thing: none of these should be enough to scare you away. As long as you do your homework and have the right plan in place, you’ll soon realize that the benefits far outweigh any of these potential fears.