December 8,2008
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Balance Transfers (101), Pt.4 –
– The deadly deadline default.- When all is said and done and your transfer provides you with the result you had hoped for, a little planning can keep the experience in the positive, Time moves quickly and the credit card lender is, of course, hoping to make some revenue on the account they offered you. When the promo offer expires, don't expect the credit card lender to send you any reminders. You should print that date in red ink some place where you'll see it often. Be prepared to either pay the credit card off by that statement date of else experience a sharp jump in finance charges.
- If the debt is too large to be paid off within the promotional period, there may be other options. Often the credit card lender will have an alternative offer they don't advertise. This is where the lender will offer a plan with a small hike in the interest rate but guarantee that it won't be raised until the credit card expires. It may still be a great bargain if it's lower than the account you're transferring from.
- Lastly, beware of the dreaded ‘universal default rate'. This is the bomb. It can happen for a number of reasons but the most common is making a late payment (or not paying at all). Again, there are many ways this bomb can be triggered but one element is far more common then the rest -- inadvertent slip-ups. We all do it. Payment arrives late in the mail, exceed available limit, check bounces (shame on you), etc. The fury can be petrifying: Astronomical rate hikes and every flavor of penalty in the shop. Always pay right away, don't wait the grace period. If the unfortunate mishap still occurs in spite of your best efforts, be informed of an unspoken grace. Most credit card institutions are willing to negotiate on a case-by-case basis the possibility of one ‘mulligan'. If you can convince they by phone that you really care about your good credit standing (not about saving a few bucks), they often are willing to erase the incident from your record as though it never happened. You can ‘turn back the clock' to the moment before the infraction, make your payment and have all of the damage undone. If you do get this relief (be very relived) remember, it's only a one-time grace. Don't expect it a second time.