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Good And Bad Of A No Balance Transfer Fee Credit Card
Credit card debt is out of control, and there are statistics to back that up. Getting out of debt is a goal that is shared by many people. There are several ways to get rid of debt, one of which is debt consolidation. This can be done by going through a debt consolidation company, getting a consumer loan or transferring balances to a single card. Not all offers are created the same. So what about a no balance transfer fee credit card?
Believe it or not, quite a few credit cards will charge you to transfer balances from other cards. Even if they are offering a very attractive interest rate, they may still add on fees. For example, they could charge $50 just to make the transfer, then a certain percentage of the total (this isn't the same as the interest rate though, it just adds to your balance). Regardless of the additional fees they are charging, it still may be a better deal than what you are currently getting.
Generally speaking, a card that doesn't charge balance transfer fees is better than one that does. However, credit card companies are very good at manipulating the numbers to make them look attractive to consumers, while earning more profits from hidden fees and the small print. But, all other things being equal, it makes sense that paying nothing to transfer money to a new card is a better than having to pay for the privilege.
The only way to know for sure whether the no balance transfer fee credit card is the better deal than one that charges fees is to read the terms of the offer. Once you understand how the fees and interest rates compare, then you can start making calculations to see which one is the better deal in the long run.
Another trick credit card companies use on no transfer fee offers is to have the lowest rate apply to only a portion of the transfer. A fairly typical offer is 0% interest for the first 6 months, but that only applies to the first $3,000. Anything above and beyond that amount will then fall under different terms.
You should also know that you can usually keep transferring balances (remember to check the terms of your agreement). So, as soon as the attractive introductory rate runs out, you can find another card that offers a similar rate and transfer your balance to that card.
There is one more thing to keep in mind when getting a no balance transfer fee credit card. What is it? Don't rack up more charges on your cards that now have a zero balance. It can be really tempting to do this because you will be spending less each month, and you will now have credit cards that have no balance on them. Whatever it takes, avoid that temptation! Do it right, and your debt will be back under control in no time.
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