Balance transfer fine print
16 January 2008
With many consumers looking at balance transfer credit cards to help them repay their existing credit card while being charged no interest it is worthwhile to remind our readers that you should always read the terms and conditions with these balance transfer credit cards.
What happens if you make a purchase on your new credit card?
- When you make your repayment, the amount you repay will come off your existing debit balance and not the new purchase that you made.
- In short, you wont be getting your 44 or 55 days of interest free period on that purchase and you may be shocked at the interest rate charge being applied to your new credit card.
What interest rate will my card revert to when the "honeymoon" period is over?
- You may find that the new interest rate may be higher than that of your existing card. Make sure that you check the interest rate applicable to your balance transfer credit card.
- The number of credit cards on the market with zero-rate introductory offers has more than tripled in the past six months as banks step up their marketing to gain your business.
- Know what rate your credit card will revert to once the introductory period is over.
Balance transfer credit cards offer you a period of four to six months where you pay zero or low interest.
What happens if I haven't repaid my credit card before the zero or low interest rate term is over?
- Some balance transfer credit cards with a zero or low interest rate charge a much higher than normal interest rate to the unpaid portion of the debt.
* Make sure you know what you are applying for when you submit an application form for a new balance transfer credit card.
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