December 8,2008
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Balance Transfers (101), Pt.2
Seeing thru the smoke and mirrors.As of late, this obscure fee is more cleverly mixed in with other credit card terms and categories (misc' or other' are pet names). Sometimes your only clue is that tricky little asterisk found in the fine print. Sometimes they show up in the middle of sentence talking about cash Advances' or check fees'. (Most offers nowadays involve blank checks that a cardholder can issue against their credit cards). So, always watch out for is the hidden "transfer fee" which can be disguised by other hazy credit card terms.
The most common transfer fee rate applied to these 0% interest credit card accounts is 3%. So, if a person were to transfer a $3,000 debt over to a 0% interest credit card account, they may be surprised when they receive their first billing statement. They will discover an unexpected $90 charge that they now owe because of this fee.
To boot, there are other stipulations that go along with this, as well. One is a Minimum Fee' (usually $5) and a Fee Cap'. Years ago, the cap was kept somewhere between $50 and $75. That would be the highest fee a person would be charged, no matter how large their balance transfer amount was. That was then. Now the caps are being raised and even lifted completely by some credit card lenders. (A $10,000 transfer, for example, carries about a $300 fee if the cap allows it.)
It all begins with the teaser'. Who can resist a good deal like free interest. So when we receive a 0% balance transfer deal for a new credit card in the mail we should exercise a few minutes of examination to look for the not-so-obvious. By the way, times have changes and good credit card deals are now reserved only for those with good credit standings. In both cases, however, all these offers will emphasize the best benefit (of course). Large bold print on the envelope will advertise something free', like No Interest' or 0% till...'.