March 3, 2009
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When to Consolidate, Pt.4
"Wacha, gitcha, gotcha's".Transfer Fee: This can ‘gitcha'. The standard credit card transfer rate today is 3% with no cap. Before last year, there were almost always caps (maximums). Under $5,000 transfers usually capped at $50. Over that amount usually capped at $75. Today, credit card transfer caps are rare to find but (I've read), they still do exist. Figure it out. Make sure the fee isn't going to bury you. It's generally a rip-off to pay a transfer fee for a credit card account you expect to soon pay off. If you plan to go the distance, however, and just pay the minimum for a long time though, it may still be worth your while to pay the full fee. Refer to the table in ‘Article 2' of this series to see where you stand.
Sleeze Legalese: Capital 1 and some others are not too proud to deliberately trick honest people. Beware of pet terms like ‘Special Rate'. The large print says ‘0% Balance Transfers'. When you open the account by phone, they'll ask if you wish to make a balance transfer at that time. Well, duhh? So you make the transfer as you open the account. Your first credit card statement arrives a month later and you notice an $150 ‘Special Rate' charge. One minute later you're back on the phone with the lender and they explain that the ‘0% APR B.T.' rate only applies if you make the transfer after having opened the account. If you made the transfer at the time you opened the credit card account you get the 10% APR ‘Special Rate' that no one ever told you about. Now you're stuck. I know...it happened to me. Make sure you paraphrase what you understand when you open the account (it will all be on tape) and get the person's identification whom you're speaking with.
Also, make sure they don't charge interest on the transfer fee during the promotional period.
‘Keep your nose clean': After that all's kool. What ever you do, however, don't mess up. Don't break even the slightest rule. One late credit card payment can slam you with a $40 fine and a 35% APR. That could cost you thousands of dollars. Pay way early. Don't ever be late!