Credit Card Applications for Best Balance Transfer

What exactly is a balance transfer credit card? Paying one credit card with another, isn't that little more than robbing Peter to pay Paul? It can be, if you abuse the process. But if you are careful, the balance transfer can be a godsend.

Balance transfer credit cards are one the easiest and smartest ways to cut down your credit card debt. Just make sure you know the terms and conditions so you will be able to maximize the savings. If you aren't careful, you could end up in the same pickle you were in before.

Why Should You Use a Balance Transfer Credit Card?

Balance transfer cards can give card users a number of advantages ranging from lower interest rates to lower monthly payments. Other benefits include:

• zero-percent interest
• single-digit-percent interest
• no annual fees
• longer grace periods
• cash-back

Be forewarned though: most of these perks are temporary. You usually only get these perks for 6-to-18 months. Also, if you are late on even one payment, some credit card companies may have the right to raise your overall interest rate to a rate that was higher than the credit card you transferred the original balance from. And finally, you may not have the option to make new purchases on your new credit card at that zero or low percentage rate.

How to Make Balance Transfer

Now you've decided that a balance transfer card is the way to go. How do you get that transfer from your old card to your new card? There are three major ways:

1. The first one is to simply fill out the papers given by your new card-issuing company.

2. Alternatively, you can get in touch with your bank's representative and say that you wish to transfer a balance and need to make arrangements for this balance transfer.

3. Another option is to shift balances by writing convenience or balance transfer checks. These simple checks look and act like regular checks. All you need to do is write a check for the amount of the balance transfer. Then you should send it to the financial institution you wish to transfer a balance from.

Note: Sometimes checks expire on a certain date, so be sure to use your check within the appropriate time frame. Remember that if you do not, the bank will charge you the regular interest set for your offer.

No matter which transfer method you decide to use, you can not transfer more than your credit line on the card you would be transferring allows.

Costs Involved with Balance Transfer

One question you are likely asking yourself is, "Are there fees involved with transferring the balance of one credit card to another?" Well...duh...of course there is. Nothing in this world is free, especially when dealing with credit card companies.

In most cases, the credit card company treats the balance transfer like a cash advance. But there are usually no fees for balance transfer is response to "Special offer" credit cards. However for Citi Platinum Select and some other companies, the balance transfer transaction fee is 3 percent of the amount of the balance transfer. Don not forget that an insignificant sum might not be worth transferring - the transaction fee might outweigh the savings you hope to get.

On top of standard transaction costs, credit card companies also charge some special fees that might be a surprise for you. Here are some of the most common fees:

• Late fees - Know your credit card company's policy on late fees. Payments are not necessarily credited the day you make them. Be aware of the lag time and send your bill in enough time to be credited by the due date.
• Over-credit-limit fees - If you charge more than your credit limit allows you too you will have to pay theses extra fees. Every time you go over the limit you get fined. This might happen more than once during one billing cycle. Credit Card companies usually charge $10 or $15 for this or up to 5 % of the amount you are over the card's limit. These fees are in addition to interest charges.
• Lost or stolen card replacement fees? You might have to pay extra $5 or $10 if you had to replace your card with a new one more than once.

Make Your Credit Card Payments on Time

After you have transferred balances, make sure you have made all your payments on time and in full or you will automatically be charged with higher fees. For the most part, there are no grace periods for balance transfers. If you're late, you get charged. They can even eliminate the initial low interest rate that sold you on the card in the first place.

That zero percent interest rate is not there to stay. That was a promotional rate designed to attract you in to a particular credit card offer. If your balance transfer amount isn't paid off by the time the period expires, your interest rate will likely go up. For example, if you default on your Citi Platinum's card agreement, the credit card company might automatically increase the APR on all your balances including all promotional balances to a 28.99% variable default rate.

The post-introductory APR depends on your credit score. If this interest rate is much higher than the rate on the other card you have been using and you have a remaining balance, you will end up losing money. Sure, you can always transfer the balance to a new card that has a lower promotional rate. But you need to be careful not to get trapped in a vicious cycle that could damage your credit history later. If you reach a point where you are using one credit card to pay another EVERY Month, you've got more problems than a balance transfer credit card application will solve.

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