You have seen them Balance Transfer Checks, everybody has. You open your credit card bill and there it is. A blank check with your name on it, for you to use in any way you want. Best of all, there is a low interest rate...0%... for a limited time. Sometimes for as long as six months or more. It looks too good to be true. As is the case most times, when something looks too good to be true, it usually is.
Credit card companies routinely send these magic checks out to people with low balances or who limit credit card use. After all, a credit card that isn't being used isn't doing much for the bank's bottom line. So they make these offers in the hope that their customer will transfer high-interest balances, take advantage of low interest for that vacation they have been passing by, or get more air miles just in case. While these are all valid reasons, this plan has some pitfalls that many or most people find themselves falling into. Here are some things to remember before you take advantage of these offers.
LOOK OUT FOR THE FEES
There is often a transaction fee for balance transfers, often as high as 3%. This term is hidden in the fine print. Be careful. That transfer of $3,000 at zero interest just cost you a cool ninety bucks. you can Balance Transfer Checks for your later credit score improvements.
CAN YOU PAY IT OFF IN TIME
The low monthly interest is a good idea if you can pay off the amount within the time limit of the offer. It's a good idea to save on interest. But remember that after six months, interest goes up to the regular interest rate. Ensure that the interest rate is not higher than the rate on your other cards.
DON'T BE LATE
If you are late with your payments –even for a day– the special rate reverts to your actual interest rate. Credit card companies that appreciate your business raise your interest rate to a default rate, typically over 29%, as a token of appreciation.
DON'T DOUBLE DOWN
Remember, if you pay to transfer a balance or use these checks to pay off another credit card, that card now has a zero or low ratio. While your intentions may be good, the temptation to use that card is excellent. Most people will use it. Cautiously at first. Just to buy gas. Maybe to go out to dinner a couple of times. Then they get an email about a great deal on a plasma TV, and before they know it, six months have gone by, and both cards are at the maximum.
DON'T USE THEM
If you are not sure you will be able to make timely payments and control your other debt, the best thing to do is avoid the temptation to take advantage of these offers. If you fail to use the checks in the allotted time, don't worry. You will get more in your following statement. Don't use them if you don't need them or if it doesn't make sense to use them.
DESTROY THE CHECKS IF NOT USED
There will be another time to discuss identity theft. But if the banks enjoy a bonanza with these checks, identity thieves are right behind them. These checks often provide information that can be used by someone else. If you are in the habit of discarding your statements, these checks, and other information without destroying them, get out of that habit. People go "dumpster diving" for this information and often use it to steal identities. It's a sad fact. But it is something we all have to be aware of.
The next time you get one of these offers, check the mailbox; remember this. Credit card companies were given enormous leverage in their ability to recover the defaulted debt by the new Bankruptcy rules. Your ability to discharge this debt is severely curtailed. So even if you took advantage of these offers with the best of intentions, you might find yourself strapped with mounting debt and nowhere to turn for relief or even a claim of fraud from the credit card company. Late fees, over-limit fees, and 30% interest can turn a $3,000.00 limit into an $8,000.00 lawsuit in no time. For many people, this spiral downward starts when they cash those checks or transfer a balance. Many of them never recover.
So, what do you do with these offers?
-
If you must use them, use them wisely.
-
Make sure you can pay them off.
-
Never make a late payment.
-
If you pay off another credit card, close the account, or exercise discipline it
takes not to use it. -
Don't pay off a credit card with a lower interest rate.
-
If you don't think you can take these steps, DON'T USE THE CHECKS!
-
Make sure you destroy the checks if choose not to use them.
You have worked hard to get the kind of credit rating it takes to qualify for these offers. Don't let the use of credit be the reason you lose your good credit rating.
As many of us know, a negative credit rating can cost countless thousands of dollars throughout your life. If you find that things have gotten out of hand, get some help. Call the credit card company, a credit counselor, or a lawyer if you need one. But don't ignore the problem. Take control. It will not go away on its own.
Credit Repair Ease is a Professional Credit Repair Company located in Brooklyn, New York. We specialize in correcting inaccurate or unverifiable remarks on credit reports with Experian, Equifax, and Transunion. We serve all boroughs of NY including Queens, Manhattan as well as Long Island's Suffolk and Nassau counties. Identity Theft, Late Payments, Collections, Chargeoffs, Foreclosure, Judgements, Bankruptcies, Liens, Inquiries, Credit Consulting, Credit Repair, and Debt Settlement.
Call today for a free consultation at (888) 803-7889 for Balance Transfer Checks Queries.
